The direct intracellular delivery of proteins has, until recently, been difficult to achieve, due primarily to the bioavailability barrier of the plasma membrane. During the past 15 years, a variety of peptides called protein transduction domains (PTDs) or cell penetrating peptides (CPPs), have been characterized for their ability to translocate into live cells. The most commonly studied are homeodomain transcription factors such as Antennapedia, the herpes simplex virus (HSV) type 1 protein VP22, and the human immunodeficiency virus (HIV-1) transactivator TAT protein. Recently, polyarginine exhibits even greater efficiency in terms of delivery of several peptides and proteins. Numerous examples of biologically active full-length proteins and peptides have been delivered to cells and tissues, both in vitro and in vivo. These studies offer new avenues for treatment of several diseases. The main mechanism of protein transduction is an electrostatic interaction with the plasma membrane, penetration into cells by macropinocytosis, and a release to cytoplasm and nuclei by retrograde transport. Moreover, the intercellular transfer of endogenous transcription factors, such as TAT and homeoproteins, seems to point to an original and important mode of signal transduction. The protein transduction systems have opened up several possibilities, not only for the development of new peptide/protein drugs but also for consideration of their physiological and developmental implications.