Escherichia coli is one of the most widely used hosts for the production of recombinant proteins. However, there are often problems in recovering substantial yields of correctly folded proteins. One approach to solve these problems is to have recombinant proteins secreted into the periplasmic space or culture medium. The secretory production of recombinant proteins has several advantages, such as simplicity of purification, avoidance of protease attack and N-terminal Met extension, and a better chance of correct protein folding. In addition to the well-established Sec system, the twin-arginine translocation (TAT) system has recently been employed for the efficient secretion of folded proteins. Various strategies for the extracellular production of recombinant proteins have also been developed. For the secretory production of complex proteins, periplasmic chaperones and protease can be manipulated to improve the yields of secreted proteins. This review discusses recent advances in secretory and extracellular production of recombinant proteins using E. coli.