The iron-regulatory hormone hepcidin is a 25-amino acid peptide that is synthesized in hepatocytes. Hepcidin binds to the cellular iron export channel ferroportin and causes its internalization and degradation and thereby decreases iron efflux from iron exporting tissues into plasma. By this mechanism, hepcidin inhibits dietary iron absorption, the efflux of recycled iron from splenic and hepatic macrophages, and the release of iron from storage in hepatocytes. Hepcidin synthesis is stimulated by plasma iron and iron stores and is inhibited by erythropoietic activity, ensuring that extracellular plasma iron concentrations and iron stores remain stable and the erythropoietic demand for iron is met. During inflammation, increased hepcidin concentrations cause iron sequestration in macrophages, resulting in hypoferremia and eventually anemia of inflammation. Hepcidin deficiency plays a central role in most iron overload disorders. The role of hepcidin abnormalities in anemias that are associated with renal disease and in resistance to erythropoietic therapies remains to be elucidated.