Hereditary hemochromatosis (HH) is a common inborn error of iron metabolism characterized by excess dietary iron absorption and iron deposition in several tissues. Clinical consequences include hepatic failure, hepatocellular carcinoma, diabetes, cardiac failure, impotence, and arthritis. Despite the discovery of the mutation underlying most cases of HH, considerable uncertainty exists in the mechanism by which the normal gene product, HFE, regulates iron homeostasis. Knockout of the HFE gene clearly confers the HH phenotype on mice. However, studies on HFE expressed in cultured cells have not yet clarified the mechanism by which HFE mutations lead to increased dietary iron absorption. Recent discoveries suggest other genes, including a second transferrin receptor and the circulating peptide hepcidin, participate in a shared pathway with HFE in regulation of iron absorption. This review summarizes our current understanding of the relationship between iron stores and absorption and presents models to explain the dysregulated iron homeostasis in HH.