The main function of the microvasculature is transport of materials. Water and solutes are carried by blood through the microvessels and exchanged, through vessel walls, with the surrounding tissues. This transport function is highly dependent on the architecture of the microvasculature and on the biophysical behavior of blood flowing through it. For example, the hydrodynamic resistance of a microvascular network, which determines the overall blood flow for a given perfusion pressure, depends on the number, size and arrangement of microvessels, the passive and active mechanisms governing their diameters, and on the apparent viscosity of blood flowing in them. Suspended elements in blood, especially red blood cells, strongly influence the apparent viscosity, which varies with several factors, including vessel diameter, hematocrit and blood flow velocity. The distribution of blood flows and red cell fluxes within a network, which influences the spatial pattern of mass transport, is determined by the mechanics of red cell motion in individual diverging bifurcations. Here, our current understanding of the biophysical processes governing blood flow in the microvasculature is reviewed, and some directions for future research are indicated.