Identified originally as a regulator of glycogen metabolism, glycogen synthase kinase-3 (GSK3) is now a well-established component of the Wnt signalling pathway, which is essential for setting up the entire body pattern during embryonic development. It may also play important roles in protein synthesis, cell proliferation, cell differentiation, microtubule dynamics and cell motility by phosphorylating initiation factors, components of the cell-division cycle, transcription factors and proteins involved in microtubule function and cell adhesion. Generation of the mouse knockout of GSK3beta, as well as studies in neurons, also suggest an important role in apoptosis. The substrate specificity of GSK3 is unusual in that efficient phosphorylation of many of its substrates requires the presence of another phosphorylated residue optimally located four amino acids C-terminal to the site of GSK3 phosphorylation. Recent experiments, including the elucidation of its three-dimensional structure, have enhanced our understanding of the molecular basis for the unique substrate specificity of GSK3. Insulin and growth factors inhibit GSK3 by triggering its phosphorylation, turning the N-terminus into a pseudosubstrate inhibitor that competes for binding with the 'priming phosphate' of substrates. In contrast, Wnt proteins inhibit GSK3 in a completely different way, by disrupting a multiprotein complex comprising GSK3 and its substrates in the Wnt signalling pathway, which do not appear to require a 'priming phosphate'. These latest findings have generated an enormous amount of interest in the development of drugs that inhibit GSK3 and which may have therapeutic potential for the treatment of diabetes, stroke and Alzheimer's disease.