Activation-induced Cytidine Deaminase (AID) is an essential regulator of B cell diversification, but its full range of action has until recently been an enigma. Based on homology, it was originally proposed to be an RNA-editing enzyme, but so far, no RNA substrates are known. Rather, it functions by deaminating cytidine, and in this manner, coupled with base-excision repair or mismatch repair machinery, it is a natural mutator. This allows it to play a central role in adaptive immunity, whereby it initiates the processes of class switch recombination and somatic hypermutation to help generate a diverse and high-affinity repertoire of immunoglobulin isotypes. More recently, it has been appreciated that methylated cytidine, already known as a key epigenetic mark on DNA controlling gene expression, can also be a target for AID modification. Coupled with repair machinery, this can facilitate the active removal of methylated DNA. This activity can impact the process of cellular reprogramming, including transition of a somatic cell to pluripotency, which requires major reshuffling of epigenetic memory. Thus, seemingly disparate roles for AID in controlling immune diversity and epigenetic memory have a common mechanistic basis. However, the very activity that is so useful for B cell diversity and cellular reprogramming is dangerous for the integrity of the genome. Thus, AID expression and activity is tightly regulated, and deregulation is associated with diseases including cancer. Here, we review the range of AID functions with a focus on its mechanisms of action and regulation. Major questions remain to be answered concerning how and when AID is targeted to specific loci and how this impacts development and disease.