Sensory information from the vestibular, visual, and somatosensory/proprioceptive systems are integrated in the brain in complex ways to produce a final motor output to muscle groups for maintaining gaze, head and body posture, and controlling static and dynamic balance. The balance system is complex, which can make differential diagnosis of dizziness quite challenging. On the other hand, this complex system is organized anatomically in a variety of pathways and some of these pathways have been well studied. The vestibulo-ocular reflex (VOR) is one such pathway. Understanding the anatomy and physiology of the VOR facilitates our understanding of normal and abnormal eye movements and research is advancing our understanding of the plasticity of the vestibular system. This review highlights anatomical and physiological features of the normal vestibular system, applies these concepts to explain some clinical findings in some common peripheral vestibular disorders, and discusses some of the research investigating the anatomical and physiological basis for vestibular compensation.