Anemia of chronic disease (ACD) or anemia of inflammation is prevalent in patients with chronic infection, autoimmune disease, cancer, and chronic kidney disease. ACD is associated with poor prognosis and lower quality of life. Management of ACD using intravenous iron and erythropoiesis stimulating agents are ineffective for some patients and are not without adverse effects, driving the need for new alternative therapies. Recent advances in our understanding of the molecular mechanisms of iron regulation reveal that increased hepcidin, the iron regulatory hormone, is a key factor in the development of ACD. In this review, we will summarize the role of hepcidin in iron homeostasis, its contribution to the pathophysiology of ACD, and novel strategies that modulate hepcidin and its target ferroportin for the treatment of ACD. Am. J. Hematol. 2012. © 2011 Wiley Periodicals, Inc.