Natural transformation is widely distributed among bacteria. Its variations, in terms of specific mechanisms, may in part reflect responses to different selective pressures in different bacteria. We have suggested that both gene transfer and acquisition of carbon, nitrogen, and energy represent physiological needs that may have contributed to the evolution of natural transformation. While natural transformation was the first mechanism of genetic exchange to be detected, it is perhaps the least understood. Our understanding of the mechanism for uptake and incorporation of soluble DNA has increased significantly in the last two decades, but the overall picture of transformation as a biologically significant function is still unfolding. The mechanism by which DNA is released for transformation, the control of genes involved in DNA release and uptake, the potential for transformation in the natural environment, and the potential of natural transformation as a tool for other microbiological studies are but a few of the important issues that remain.