The alternative oxidase is a membrane-bound ubiquinol oxidase found in the majority of plants as well as many fungi and protists, including pathogenic organisms such as Trypanosoma brucei. It catalyzes a cyanide- and antimycin-A-resistant oxidation of ubiquinol and the reduction of oxygen to water, short-circuiting the mitochondrial electron-transport chain prior to proton translocation by complexes III and IV, thereby dramatically reducing ATP formation. In plants, it plays a key role in cellular metabolism, thermogenesis, and energy homeostasis and is generally considered to be a major stress-induced protein. We describe recent advances in our understanding of this protein's structure following the recent successful crystallization of the alternative oxidase from T. brucei. We focus on the nature of the active site and ubiquinol-binding channels and propose a mechanism for the reduction of oxygen to water based on these structural insights. We also consider the regulation of activity at the posttranslational and retrograde levels and highlight challenges for future research.