Cow's milk allergy affects approximately 2% of infants under 2 years of age. This review summarizes the recent advances in understanding its pathophysiology and immunological mechanisms. Apart from IgE-mediated atopic manifestations, T cell-mediated reactions have been demonstrated in infants with cow's milk allergy. The clinical spectrum ranges from immediate-type reactions, presenting with urticaria and angioedema to intermediate and late-onset reactions, including atopic dermatitis, infantile colic, gastro-oesophageal reflux, oesophagitis, infantile proctocolitis, food-associated enterocolitis and constipation. The exact mechanisms of these disorders are still poorly understood. Double-blind, placebo controlled food challenge, the definitive diagnostic test for cow's milk allergy, is increasingly being replaced by the measurement of food-specific antibodies, in combination with skin-prick or atopy patch testing. The treatment of cow's milk allergy relies on allergen avoidance and hypoallergenic formulae, or maternal elimination diets in breast-fed infants.