Eukaryotic and archaeal elongation factor 2 contains a unique post-translationally modified histidine residue, named diphthamide. Genetic and biochemical studies have revealed that diphthamide biosynthesis involves a multi-step pathway that is evolutionally conserved among lower and higher eukaryotes. During certain bacterial infections, diphthamide is specifically recognized by bacterial toxins, including diphtheria toxin, Pseudomonas exotoxin A and cholix toxin. Although the pathological relevance is well studied, the physiological function of diphthamide is still poorly understood. Recently, many new interesting developments in understanding the biosynthesis have been reported. Here, we review the current understanding of the biosynthesis and biological function of diphthamide.