beta-Lactoglobulin (beta-LG) is the major whey protein of ruminant species and is also present in the milks of many, but not all, other species. Its amino-acid sequence and 3-dimensional structure show that it is a lipocalin, a widely diverse family, most of which bind small hydrophobic ligands and thus may act as specific transporters, as does serum retinol binding protein. Bovine beta-LG binds a wide range of ligands, but this may not be the reason for its presence in milk. In reviewing the structure and physicochemical properties of the protein, we present the structures of the ligands cholesterol (at a resolution of 2.0A, R = 0.221; Rfree = 0.295) and vitamin D2 (at a resolution of 2.4A, R = 0.212; Rfree = 0.297) each bound to the central binding cavity of bovine beta-LG at pH 7.3. Neither ligand is fully visible in the electron density maps, and the less well-ordered regions are the polar end groups at the mouth of the binding site. In a separate experiment, a mercury ion was bound to the free Cys121 (at a resolution of 2.2A, R = 0.218; Rfree = 0.288) in a way that transmitted a small structural change through Asp137 via Arg148 to the dimer interface. It is not clear if the known dissociation that arises from the reaction of beta-LG with HgCl2 results from this perturbation. In reviewing the structural studies that reveal the ligand binding sites for long-chain fatty acids, retinoids, and steroids, only the central location, common to all lipocalins so far examined, is occupied under the conditions used. We find that there is no crystallographic evidence of another ligand binding site in our crystals grown in approximately 1.3 M citrate, although low ionic strength studies in solution indicate the possible presence of at least one other low affinity site. The apparent ability of the binding site to accommodate a wide range of ligands may point to a possible physiological function. However, by considering the lipocalin family in general, and the species distribution of beta-LG in particular, some speculation as to the physiological function can be made. beta-Lactoglobulin has been reported as being implicated, inter alia, in hydrophobic ligand transport and uptake, enzyme regulation, and the neonatal acquisition of passive immunity. However, these functions do not appear to be consistent between species. Sequence comparisons among members of the lipocalin family reveal that glycodelin, found in the human endometrium during early pregnancy, is the most closely related to beta-LG. Although the function of glycodelin is also unknown, it appears to have effects on the immune system and/or to be involved in differentiation. It is proposed that beta-LG, over-expressed in the lactating mammary gland of many, but not all, species, is primarily an important source of amino acids for the offspring of those animals that produce it, but that this function arose by gene duplication from the physiologically essential glycodelin. The other functions that have been associated with beta-LG in the neonate are, therefore, fortuitous.