We review digestion and osmoregulation in the avian gut, with an emphasis on the ways these different functions might interact to support or constrain each other and the ways they support the functioning of the whole animal in its natural environment. Differences between birds and other vertebrates are highlighted because these differences may make birds excellent models for study and may suggest interesting directions for future research. At a given body size birds, compared with mammals, tend to eat more food but have less small intestine and retain food in their gastrointestinal tract (GIT) for shorter periods of time, despite generally higher mass-specific energy demands. On most foods, however, they are not less efficient at digestion, which begs the question how they compensate. Intestinal tissue-specific rates of enzymatic breakdown of substrates and rates of active transport do not appear higher in birds than in mammals, nor is there a demonstrated difference in the extent to which those rates can be modulated during acclimation to different feeding regimes (e.g. diet, relative intake level). One compensation appears to be more extensive reliance on passive nutrient absorption by the paracellular pathway, because the avian species studied so far exceed the mammalian species by a factor of at least two- to threefold in this regard. Undigested residues reach the hindgut, but there is little evidence that most wild birds recover microbial metabolites of nutritional significance (essential amino acids and vitamins) by re-ingestion of faeces, in contrast to many hindgut fermenting mammals and possibly poultry. In birds, there is some evidence for hindgut capacity to breakdown either microbial protein or protein that escapes the small intestine intact, freeing up essential amino acids, and there is considerable evidence for an amino acid absorptive capacity in the hindgut of both avian and mammalian hindgut fermenters. Birds, unlike mammals, do not excrete hyperosmotic urine (i.e. more than five times plasma osmotic concentration). Urine is mixed with digesta rather than directly eliminated, and so the avian gut plays a relatively more important role in water and salt regulation than in mammals. Responses to dehydration and high- and low-salt loads are reviewed. Intestinal absorption of ingested water is modulated to help achieve water balance in one species studied (a nectar-feeding sunbird), the first demonstration of this in any terrestrial vertebrate. In many wild avian species the size and digestive capacity of the GIT is increased or decreased by as much as 50% in response to nutritional challenges such as hyperphagia, food restriction or fasting. The coincident impacts of these changes on osmoregulatory or immune function of the gut are poorly understood.