Outcome based or competency based education (OBE) is so firmly established in undergraduate medical education that it might not seem necessary to ask why it was included in recommendations for the future, like the Flexner centenary report. Uncritical acceptance may not, however, deliver its greatest benefits. Our aim was to explore the underpinnings of OBE: its historical origins, theoretical basis, and empirical evidence of its effects in order to answer the question: How can predetermined learning outcomes influence undergraduate medical education? This literature review had three components: A review of historical landmarks in the evolution of OBE; a review of conceptual frameworks and theories; and a systematic review of empirical publications from 1999 to 2010 that reported data concerning the effects of learning outcomes on undergraduate medical education. OBE had its origins in behaviourist theories of learning. It is tightly linked to the assessment and regulation of proficiency, but less clearly linked to teaching and learning activities. Over time, there have been cycles of advocacy for, then criticism of, OBE. A recurring critique concerns the place of complex personal and professional attributes as ''competencies''. OBE has been adopted by consensus in the face of weak empirical evidence. OBE, which has been advocated for over 50 years, can contribute usefully to defining requisite knowledge and skills, and blueprinting assessments. Its applicability to more complex aspects of clinical performance is not clear. OBE, we conclude, provides a valuable approach to some, but not all, important aspects of undergraduate medical education.