Calcium hydroxide has been included within several materials and antimicrobial formulations that are used in a number of treatment modalities in endodontics. These include, inter-appointment intracanal medicaments, pulp-capping agents and root canal sealers. Calcium hydroxide formulations are also used during treatment of root perforations, root fractures and root resorption and have a role in dental traumatology, for example, following tooth avulsion and luxation injuries. The purpose of this paper is to review the properties and clinical applications of calcium hydroxide in endodontics and dental traumatology including its antibacterial activity, antifungal activity, effect on bacterial biofilms, the synergism between calcium hydroxide and other agents, its effects on the properties of dentine, the diffusion of hydroxyl ions through dentine and its toxicity. Pure calcium hydroxide paste has a high pH (approximately 12.5-12.8) and is classified chemically as a strong base. Its main actions are achieved through the ionic dissociation of Ca(2+) and OH(-) ions and their effect on vital tissues, the induction of hard-tissue deposition and the antibacterial properties. The lethal effects of calcium hydroxide on bacterial cells are probably due to protein denaturation and damage to DNA and cytoplasmic membranes. It has a wide range of antimicrobial activity against common endodontic pathogens but is less effective against Enterococcus faecalis and Candida albicans. Calcium hydroxide is also an effective anti-endotoxin agent. However, its effect on microbial biofilms is controversial.