Initially used as a replacement therapy for immunodeficiency diseases, intravenous immunoglobulin (IVIg) is now widely used for a number of autoimmune and inflammatory diseases. Considerable progress has been made in understanding the mechanisms by which IVIg exerts immunomodulatory effects in autoimmune and inflammatory disorders. The mechanisms of action of IVIg are complex, involving modulation of expression and function of Fc receptors, interference with activation of complement and the cytokine network and of idiotype network, regulation of cell growth, and effects on the activation, differentiation, and effector functions of dendritic cells, and T and B cells.