The ability of proteins to fold to their functional states following synthesis in the intracellular environment is one of the most remarkable features of biology. Substantial progress has recently been made towards understanding the fundamental nature of the mechanism of the folding process. This understanding has been achieved through the development and concerted application of a variety of novel experimental and theoretical approaches to this complex problem. The emerging view of folding is that it is a stochastic process, but one biased by the fact that native-like interactions between residues are, on average, more stable than non-native ones. The sequences of natural proteins have emerged through evolutionary processes such that their unique native states can be found very efficiently even in the complex environment inside a living cell. But under some conditions proteins fail to fold correctly, or to remain correctly folded, in living systems, and this failure can result in a wide range of diseases. One group of diseases, known as amyloidoses, which includes Alzheimer's disease and the transmissible spongiform encephalopathies, involves deposition of aggregated proteins in a variety of tissues. These diseases are particularly intriguing because evidence is accumulating that the formation of the highly organized amyloid aggregates is a generic property of polypeptides, and not simply a feature of the few proteins associated with recognized pathological conditions. That such aggregates are not normally found in properly functional biological systems is again a testament to evolution, in this case of a variety of mechanisms inhibiting their formation. Understanding the nature of such protective mechanisms is a crucial step in the development of strategies to prevent and treat these debilitating diseases.