Organisms capable of rapid physiological colour change have become model taxa in the study of camouflage because they are able to respond dynamically to the changes in their visual environment. Here, we briefly review the ways in which studies of colour changing organisms have contributed to our understanding of camouflage and highlight some unique opportunities they present. First, from a proximate perspective, comparison of visual cues triggering camouflage responses and the visual perception mechanisms involved can provide insight into general visual processing rules. Second, colour changing animals can potentially tailor their camouflage response not only to different backgrounds but also to multiple predators with different visual capabilities. We present new data showing that such facultative crypsis may be widespread in at least one group, the dwarf chameleons. From an ultimate perspective, we argue that colour changing organisms are ideally suited to experimental and comparative studies of evolutionary interactions between the three primary functions of animal colour patterns: camouflage; communication; and thermoregulation.