Over the past four years RNA interference (RNAi) has exploded onto the research scene as a new approach to manipulate gene expression in mammalian systems. More recently, RNAi has garnered much interest as a potential therapeutic strategy. In this review, we briefly summarize the current understanding of RNAi biology and examine how RNAi has been used to study the genetic basis of physiological and disease processes in mammalian systems. We also explore some of the new developments in the use of RNAi for disease therapy and highlight the key challenges that currently limit its application in the laboratory, as well as in the clinical setting.