The past two decades have witnessed an upsurge in the number of external agencies involved in the health sectors of developing countries. Concomitantly, there has been an increase in the volume of resources transferred through multilateral, bilateral and non-governmental organizations to these health systems. Notwithstanding the beneficial impact of increased resources, recipients and donors are increasingly concerned about the effects of this trend. This is particularly pertinent where the effort lacks adequate coordination. Recipients despair of an unruly mélange of external ideas and initiatives, that too often results in project proliferation and duplication, unrealistic demands, and ultimately a loss of control over the health development process. Donors on the contrary, are concerned about aid efficiency and effectiveness, two areas it is assumed will gain from increased attention to coordination. Both recipients and donors are looking for ways of better managing the aid relationship. Although there has been considerable experience with coordination strategies, most writing has considered external assistance in general, rather than the health sector in particular. The literature is striking in its bias towards the needs and perspectives of the donor community. There has been little analysis of the manner in which recipient ministries of health manage donors and the influx of resources. This review begins to fill this gap. Its focus is country-level, where most direct gains from coordination are to be reaped. The paper begins with an enumeration of the many and diverse trends which have raised the salience of aid coordination. A definition of coordination, a term used ambiguously in the existing literature, is then developed and the principles of aid coordination outlined. Finally, attention is directed to the initiatives of recipients and donors to improve the coordination of health sector aid.