Host-microbe dialogue is involved not only in maintenance of mucosal homeostasis but also in the pathogenesis of several infectious, inflammatory, and neoplastic disorders of the gut. This has led to a resurgence of interest in the colonic microbiota in health and disease. Recent landmark findings are addressed here. Reciprocal signalling between the immune system and the microbiota plays a pivotal role in linking alterations in gut microbiota with risk of metabolic disease in the host, notably insulin resistance, obesity, and chronic low-grade inflammation. Loss of ancestral indigenous organisms consequent upon a modern lifestyle may contribute to an increased frequency of various metabolic and immuno-allergic diseases. The potential to address this underpins the science of pharmabiotics. Advances in understanding host-microbe interactions within the gut can inform rational probiotic or pharmabiotic selection criteria. In addition, the gut microbiota may be a repository for drug discovery as well as a therapeutic target.