Hepcidin, a recently discovered peptide hormone, is the homeostatic regulator of intestinal iron absorption, iron recycling by macrophages and iron mobilization from hepatic stores. Hepcidin inhibits the cellular efflux of iron by binding to and inducing the degradation of ferroportin. Hepcidin synthesis is increased by iron loading and decreased by anemia and hypoxia. Additionally, hepcidin synthesis is greatly induced during inflammation, trapping iron in macrophages, decreasing plasma iron concentrations and causing anemia of inflammation. Recent studies indicate that hepcidin deficiency underlies most known forms of hereditary hemochromatosis. The discovery of hepcidin and its role in iron metabolism could lead to new therapies for anemia of inflammation and hemochromatosis.