Physico-chemical properties of the trehalose-water system are reviewed with special reference to the transformations that may shed light on the mechanism of trehalose bio-protection. Critical analysis of solution thermodynamics is made in order to scrutinize trehalose properties often called 'anomalous' and to check the consistency of literature results. Discussion on the conversion between the solid state polymorphic forms is given, with a special emphasis of the transformations involving the newly identified anhydrous crystalline form of alpha,alpha-trehalose, TRE(alpha). This exotic crystal is almost 'isomorphous' with the dihydrate crystal structure, and possesses the unique feature of reversibly absorbing water to produce the dihydrate, without changing the main structural features. The reversible process could play a functional role in the well-known ability of this sugar to protect biological structures from damage during desiccation. The final aim of the paper is to add some new insights into and to reconcile previous hypotheses for the peculiar 'in vivo' action of trehalose.