Iron metabolism in man is a highly regulated process designed to provide iron for erythropoiesis, mitochondrial energy production, electron transport, and cell proliferation. The mechanisms of iron handling also protect cells from the deleterious effects of free iron, which can produce oxidative damage of membranes, proteins, and lipids. Over the past decade, several important molecules involved in iron homeostasis have been discovered, and their function has expanded our understanding of iron trafficking under normal and pathological conditions. Physiologic iron metabolism is strongly influenced by inflammation, which clinically leads to anemia. Although hepcidin, a small circulating peptide produced by the liver, has been found to be the key regulator of iron trafficking, molecular pathways of iron sensing that control iron metabolism and hepcidin production are still incompletely understood. With this review, we provide an overview of the current understanding of iron metabolism, the recently discovered regulators of iron trafficking, and a focus on the effects of inflammation on the process.