Encapsulating peritoneal sclerosis (EPS) is a severe complication of long-term peritoneal dialysis (PD) with a 50% mortality rate. EPS is characterized by progressive and excessive fibrotic thickening of the peritoneum, leading to encapsulation of the bowels and intestinal obstruction. At present, EPS cannot be detected with certainty during its early stages; however, a progressive loss of ultrafiltration capacity often precedes its development. Studies that attempted to elucidate the pathogenesis of EPS have shown that the duration of exposure to PD fluids is the most important risk factor for EPS, and that young age and possibly the effects of peritonitis are additional contributory factors. The pathophysiology of EPS is probably best described as a multiple-hit process with a central role for transforming growth factor β. A form of EPS that develops shortly after kidney transplantation has also been recognized as a distinct clinical entity, and may be a common form of EPS in countries with a high transplantation rate. Criteria have been developed to identify EPS by abdominal CT scan at the symptomatic stage, but further clinical research is needed to identify early EPS in asymptomatic patients, to clarify additional risk factors for EPS and to define optimal treatment strategies.