Hypersensitivity pneumonitis (HP), or extrinsic allergic alveolitis, is due to a hypersensitivity reaction after repeated inhalation of finely dispersed antigens, mainly organic particles or low molecular weight chemicals. The essence of this disease is an interaction between the host's immune system and external antigen, influenced by both genetic and environmental factors. In susceptible subjects, it leads to a combined type III allergic reaction of Gell and Coombs (with formation of precipitines) and a type IV lymphocytic reaction (with a granulomatous inflammation in the distal bronchioles and alveoli). This review gives an update on epidemiology, antigens, pathogenesis, host susceptibility, environmental factors, clinical features, diagnosis and treatment in HP. The list of aetiological agents is long and new sources of antigens are constantly being identified. Host risk factors are poorly characterized, with the exception of those linked to exposure factors. Environmental factors and cofactors may be critical for the pathogenesis of the disease. HP is not a uniform disease entity, but a complex dynamic clinical syndrome such that different patterns of disease emerge over time. The diagnosis is made from a combination of clinical features, radiographic abnormalities, lung function tests and immunological tests. The use of inhalation challenge tests for the diagnosis has been hampered by the lack of standardization. Antigen avoidance is the key element in the treatment. There is often an apparent beneficial response to corticosteroids, but it may be difficult to distinguish between the effects of treatment, the natural course of the disease and the effect of antigen avoidance.