Functional dyspepsia (FD) is one of the most common gastrointestinal disorders. This review summarizes recent progress in our understanding of the pathogenesis and therapy for FD. Although distinction among FD, irritable bowel syndrome, and reflux disease is difficult in population-based studies, separate entities can be recognized in patients who seek medical attention. The pathogenesis of FD remains unclear, but recent studies have demonstrated a role for acute gastrointestinal infection in triggering FD and in genetic polymorphisms of G-proteins in predisposing to FD. The role of abnormalities in gastric motor function, visceral hypersensitivity, and psychosocial factors in the pathophysiology of dyspeptic symptoms has been the topic of multiple studies. Treatment options for FD remain limited. Recent studies have focused on acid-suppressive drugs and on novel prokinetics. Progress in our understanding of the pathogenesis and pathophysiology of FD may lead to new or improved treatment modalities. Areas of major advances are the role of infection and genetic predisposition and studies on the role of abnormalities in gastric motility and sensitivity.