Human endogenous retroviruses (HERVs) have recently been suggested as mediators of normal biological processes such as cellular differentiation and regulation of gene expression. Moreover, a direct role for HERVs in pathogenesis and the development of disease is now better appreciated. Elucidation of the mechanisms regulating HERV biology should provide information about fundamental cellular activities and the pathogenesis of multifactorial diseases such as cancer and autoimmune disease. The importance of understanding the roles of HERVs is underscored by the recently obtained insight that activation of endogenous retroviruses poses potential risks following xenotransplantation and in gene therapy using retroviral vectors. Furthermore, HERV-encoded superantigens have recently been implicated as causes of autoimmune disease. This review discusses the established and possible biological roles of HERVs, and proposes hypotheses concerning their involvement as mediators of fundamental cellular responses. We propose that the evolutionary persistence of endogenous retroviruses in the genomes of eukaryotic cells reflects their indispensability in important normal functions in specialized cellular environments. HERVs can also be potentially hazardous through their involvement in the development of disease. In addition, the creation of new retroviruses can occur through recombination, between different HERVs and between HERVs and exogenous retroviruses.