The aflatoxins are a group of closely related mycotoxins that are widely distributed in nature. The most important of the group is aflatoxin B1 (AFB1), which has a range of biological activities, including acute toxicity, teratogenicity, mutagenicity and carcinogenicity. In order for AFB1 to exert its effects, it must be converted to its reactive epoxide by the action of the mixed function mono-oxygenase enzyme systems (cytochrome P450-dependent) in the tissues (in particular, the liver) of the affected animal. This epoxide is highly reactive and can form derivatives with several cellular macromolecules, including DNA, RNA and protein. Cytochrome P450 enzymes may additionally catalyse the hydroxylation (to AFQ1 and AFM1) and demethylation (to AFP1) of the parent AFB1 molecule, resulting in products less toxic than AFB1. Conjugation of AFB1 to glutathione (mediated by glutathione S-transferase) and its subsequent excretion is regarded as an important detoxification pathway in animals. Resistance to AFB1 toxicity has been interpreted in terms of levels and activities of these detoxifying pathways. This article reviews the multiple reactions and effects attributed to aflatoxin, with particular reference to the interaction of aflatoxin with nucleic acids and proteins, and the contribution this mycotoxin has in disease development and in the promotion of hepatocellular carcinoma (HCC). The anti-mutagenic properties of several dietary factors are also considered in this article. Undoubtedly, the most important aspect of aflatoxin action is its putative role in the development of human cancer, in particular, HCC. Recently, there has been a renewed interest in this aspect and experimental evidence is rapidly accumulating at the molecular level, indicating aflatoxin as an important consideration in the aetiology of human HCC.