Lactoferrin is a member of the transferrin family of iron-binding glycoproteins that is abundantly expressed and secreted from glandular epithelial cells. In secretions, such as milk and fluids of the intestinal tract, lactoferrin is an important component of the first line of host defence. During the inflammatory process, lactoferrin, a prominent component of the secondary granules of neutrophils (PMNs), is released in infected tissues and in blood and then it is rapidly cleared by the liver. In addition to the antimicrobial properties of lactoferrin, a set of studies has focused on its ability to modulate the inflammatory process and the overall immune response. Though many in vitro and in vivo studies report clear regulation of the immune response and protective effect against infection and septic shock by lactoferrin, elucidation of all the cellular and molecular mechanisms of action is far from being achieved. At the cellular level, lactoferrin modulates the migration, maturation and function of immune cells. At the molecular level and in addition to iron binding, interactions of lactoferrin with a plethora of compounds, either soluble or membrane molecules, account for its modulatory properties. This paper reviews our current understanding of the cellular and molecular mechanisms that explain the regulatory properties of lactoferrin in host defence.