Gonococci undergo frequent and efficient natural transformation. Transformation occurs so often that the population structure is panmictic, with only one long-lived clone having been identified. This high degree of genetic exchange is likely necessary to generate antigenic diversity and allow the persistence of gonococcal infection within the human population. In addition to spreading different alleles of genes for surface markers and allowing avoidance of the immune response, transformation facilitates the spread of antibiotic resistance markers, a continuing problem for treatment of gonococcal infections. Transforming DNA is donated by neighbouring gonococci by two different mechanisms: autolysis or type IV secretion. All types of DNA are bound non-specifically to the cell surface. However, for DNA uptake, Neisseria gonorrhoeae recognizes only DNA containing a 10-base sequence (GCCGTCTGAA) present frequently in the chromosome of neisserial species. Type IV pilus components and several pilus-associated proteins are necessary for gonococcal DNA uptake. Incoming DNA is subject to restriction, making establishment of replicating plasmids difficult but not greatly affecting chromosomal transformation. Processing and integration of transforming DNA into the chromosome involves enzymes required for homologous recombination. Recent research on DNA donation mechanisms and extensive work on type IV pilus biogenesis and recombination proteins have greatly improved our understanding of natural transformation in N. gonorrhoeae. The completion of the gonococcal genome sequence has facilitated the identification of additional transformation genes and provides insight into previous investigations of gonococcal transformation. Here we review these recent developments and address the implications of natural transformation in the evolution and pathogenesis N. gonorrhoeae.