Data on the chemical composition and pharmacological activity of chaga (Inonotus obliquus) are reviewed. The possible mechanisms of action and factors responsible for the discrepancy of data available in the literature are discussed. The physical and chemical characteristics of melanin (polyphenolic chromogenic humin-like complex present in chaga) and its role in the regulation of physiological processes are considered.The curative properties of chaga have been known from ancient times. Despite many ages of use in folk medicine and a broad spectrum of biological action, chaga has found only restricted use in the officinal medicine. Numerous attempts to elucidate the therapeutic potential of chaga preparations for the prophylaxis and treatment of cancer and other disorders gave rather ambiguous results. This review presents an attempt at systematizing available published data on the chemical nature of components isolated from chaga, their pharmacological activity, and the mechanism of biological action.According to the botanic classification, Chaga -also known as birch fungus (Fungus betulinus) -represent terrestrial polypore fungi Inonotus obliquus (Fr.) Pil of Polyporaceae (or Gymenochaetaceae) family belonging to Basidiomycota phylum (basidiomycetes) [1,2]. About 25000 species of basidiomycetes have been described, including about 500 polypore fungi that are widely occurring in Europe, Asia, North America, and Africa. However, only a small fraction of these species have been evaluated with respect to biological properties, of which 75% show strong antimicrobial activity, and these may constitute a good source for developing new antibiotics. These fungi contain numerous components exhibiting antiviral, cytotoxic, immunomodulatory, antidiabetic, and antioxidant properties. In Japan, some of the protein-bound polysaccharides from polypores and other basidiomycetes have found their way into the market as anticancer drugs [3].In Russia, Poland, and Belarus, medicinal preparations are more frequently made of chaga (birch fungus) [1, 2, 4], which represents a product of the fruitless (sterile) stage of development of a wood-destroying fungus parasitizing on trunks, mostly of birch and less frequently of alder, witchen, and bird cherry. Chaga is a shapeless formation [2, 4], differing from the fruiting body (basidiocarp) of a polypore that typically has a hoof shape. The cycle of birch fungus development and the formation of chaga have unique features. Basidiospores of Inonotus obliquus spread in air to fall onto damaged sites of the crust of living birch trees (frost-induced damage, broken branches, etc.), grow into the wood, and form a mycelium that consumes the plant juice. The threads (hyphae) of mycelium penetrate into the wood, destroy it, and lead to the formation of a structureless white touchwood. Simultaneously, a fruiting body (basidiocarp) producing spores is formed under the crust (at the sites of initial penetration). On the fourth year, this mycelium emerges at the crust surface, where the fruitless myce...