Ionic liquids are salts that are liquid at low temperature (<100 degrees C) which represent a new class of solvents with nonmolecular, ionic character. Even though the first representative has been known since 1914, ionic liquids have only been investigated as solvents for transition metal catalysis in the past ten years. Publications to date show that replacing an organic solvent by an ionic liquid can lead to remarkable improvements in well-known processes. Ionic liquids form biphasic systems with many organic product mixtures. This gives rise to the possibility of a multiphase reaction procedure with easy isolation and recovery of homogeneous catalysts. In addition, ionic liquids have practically no vapor pressure which facilitates product separation by distillation. There are also indications that switching from a normal organic solvent to an ionic liquid can lead to novel and unusual chemical reactivity. This opens up a wide field for future investigations into this new class of solvents in catalytic applications.