Repulsive guidance molecule b (RGMb), a glycosylphosphatidylinositol-anchored member of the RGM family, is initially identified as a co-receptor of bone morphogenetic protein (BMP) in the nervous system. The expression of RGMb is transcriptionally regulated by dorsal root ganglion 11 (DRG11), which is a transcription factor expressed in embryonic DRG and dorsal horn neurons and plays an important role in the development of sensory circuits. RGMb is involved in important physiological processes such as embryonic development, immune response, intercellular adhesion and tumorigenesis. Furthermore, RGMb is mainly involved in the regulation of RGMb–neogenin–Rho and BMP signalling pathways. The recent discovery of programmed death-ligand 2 (PD-L2)–RGMb binding reveals that the cell signalling network and functional regulation centred on RGMb are extremely complex. The latest report suggests that down-regulation of the PD-L2–RGMb pathway in the gut microbiota promotes an anti-tumour immune response, which defines a potentially effective immune strategy. However, the biological function of RGMb in a variety of human diseases has not been fully determined, and will remain an active research field. This article reviews the properties and functions of RGMb, focusing on its role under various physiological and pathological conditions.