This is a review on the current status of capsule endoscopy in the assessment of patients with gastrointestinal bleeding of obscure origin after initial negative upper endoscopy and colonoscopy. Relevant information was gathered from a Medline search of the English literature, previous review and original articles, references cited in papers, and by checking the latest issues of appropriate journals. Based on the available evidence, capsule endoscopy, if done early in the course of investigation, can identify a bleeding lesion and thus direct subsequent test or treatment in about 60% of patients. Consequently, resources can potentially be saved as unnecessary investigations, blood transfusions and hospital admissions can be minimized and early implementation of definite treatments will be possible. The best candidates for capsule endoscopy are those with ongoing overt obscure bleeding or occult obscure bleeding. Large prospective studies are necessary to assess the impact of capsule endoscopy on clinical outcome.