Lyme borreliosis is a systemic infection caused by the spirochaete Borrelia burgdorferi, which is transmitted by tick bites and maintained in a delicately balanced ecological cycle. Recent increases in the population densities of tick hosts, the abundance of ticks and the proximity of man to natural tick habitats have led to an escalating worldwide incidence of Lyme borreliosis, and nonspecific clinical manifestations have yielded significant misunderstanding of the disease. After entry, B. burgdorferi activates local inflammation, yet evades host defences and facilitates dissemination by potentially masquerading with host components such as plasmin and complement. The extent of tissue injury is determined by the aggressiveness of host inflammation and immunological reactions, as well as by genetic attributes of the spirochaete. The clinical presentation can be highly varied, including early manifestations that are limited to erythema migrans and ranging to disseminated infection with arthritis, carditis, cranial nerve palsy, peripheral neuropathy, meningitis, or other manifestations. Diagnostic tests have improved, but are unhelpful during certain stages of infection. Therapy varies depending on the degree of involvement, and recovery is usually rapid and complete. Post-treatment clinical manifestations in the absence of evidence for active infection are still poorly understood. The understanding of how B. burgdorferi survives in the environment and interacts with human and mammalian hosts has improved. However, further advances in prevention and therapy depend on continued investigation of the ecological risks and improved understanding of the pathobiology of this obligate bacterial parasite.