Interaction of CD44, an adhesion molecule, with its extracellular matrix ligand, hyaluronan (HA), has been suggested to play a critical role in a number of biological manifestations, including cell migration, tumorigenesis, metastasis, and regulation of immune responses. CD44 comprises a large family of transmembrane glycoproteins that exhibit extensive molecular heterogeneity. This heterogeneity in size is generated by alternative RNA splicing of variable exons as well as by post-translational modifications. Most cell types express CD44 but do not bind HA. The biological functions of CD44, including the regulation of lymphocyte recruitment to the sites of inflammation, have been attributed to the generation of a functionally active, HA-adhesive phenotype. The molecular mechanisms underlying the regulation of CD44 expression and the generation of a functionally active HA-binding phenotype are not well understood. Recently, CD44-HA interactions have been reported to play a critical role in a number of autoimmune diseases in humans and experimental animal models. Initial studies have taken advantage of anti-CD44 antibodies which specifically block CD44-HA interactions. Administration of these antibodies in several experimental murine models of autoimmune diseases resulted in alleviation of inflammatory reactions. In addition, the generation of CD44-deficient animals has facilitated our understanding of the involvement of CD44 in inflammation and autoimmune diseases. This review will focus on the recent advances in the molecular mechanisms regulating CD44 expression, ligand binding, as well as the contribution of CD44 to the development of inflammation and autoimmune disorders.