In animals, iridescence is generated by the interaction of light with biological tissues that are nanostructured to produce thin films or diffraction gratings. Uniquely among animal visual signals, the study of iridescent coloration contributes to biological and physical sciences by enhancing our understanding of the evolution of communication strategies, and by providing insights into physical optics and inspiring biomimetic technologies useful to humans. Iridescent colours are found in a broad diversity of animal taxa ranging from diminutive marine copepods to terrestrial insects and birds. Iridescent coloration has received a surge of research interest of late, and studies have focused on both characterizing the nanostructures responsible for producing iridescence and identifying the behavioural functions of iridescent colours. In this paper, we begin with a brief description of colour production mechanisms in animals and provide a general overview of the taxonomic distribution of iridescent colours. We then highlight unique properties of iridescent signals and review the proposed functions of iridescent coloration, focusing, in particular, on the ways in which iridescent colours allow animals to communicate with conspecifics and avoid predators. We conclude with a brief overview of non-communicative functions of iridescence in animals. Despite the vast amount of recent work on animal iridescence, our review reveals that many proposed functions of iridescent coloration remain virtually unexplored, and this area is clearly ripe for future research.