Saussurea costus (Falc.) Lipschitz, syn Saussurea lappa C.B. Clarke is a well known and important medicinal plant widely used in several indigenous systems of medicine for the treatment of various ailments, viz. asthma, inflammatory diseases, ulcer and stomach problems. Sesquiterpene lactones have been reported as the major phytoconstituents of this species. Different pharmacological experiments in a number of in vitro and in vivo models have convincingly demonstrated the ability of Saussurea costus to exhibit anti-inflammatory, anti-ulcer, anticancer and hepatoprotective activities, lending support to the rationale behind several of its traditional uses. Costunolide, dehydrocostus lactone and cynaropicrin, isolated from this plant, have been identified to have potential to be developed as bioactive molecules. Due to the remarkable biological activity of Saussurea costus and its constituents it will be appropriate to develop them as a medicine. The present review is an up-to-date and comprehensive analysis of the botany, chemistry, pharmacology and traditional and folkloric uses of Saussurea costus.