Systemic iron balance must be tightly regulated to prevent the deleterious effects of iron deficiency and iron overload. Hepcidin, a circulating hormone that is synthesized by the liver, has emerged as a key regulator of systemic iron homeostasis. Hepcidin inhibits the absorption of dietary iron from the intestine and the release of iron derived from red blood cells from macrophages. Therefore, variation in hepcidin levels modifies the total amount of iron stored in the body and the availability of iron for erythropoiesis. The production of hepcidin by the liver is modulated by multiple physiological stimuli, including iron loading, inflammation, and erythropoietic activity. Investigation of the functions of the gene products mutated in inherited iron disorders using tissue-culture systems and animal models has provided valuable insights into the mechanisms by which these hepcidin responses are mediated. This review focuses on recent advances in our understanding of the molecular mechanisms underlying the regulation of systemic iron homeostasis.