The status of understanding of the operation of bulk heterojunction (BHJ) solar cells is reviewed. Because the carrier photoexcitation recombination lengths are typically 10 nm in these disordered materials, the length scale for self-assembly must be of order 10–20 nm. Experiments have verified the existence of the BHJ nanostructure, but the morphology remains complex and a limiting factor. Three steps are required for generation of electrical power: i) absorption of photons from the sun; ii) photoinduced charge separation and the generation of mobile carriers; iii) collection of electrons and holes at opposite electrodes. The ultrafast charge transfer process arises from fundamental quantum uncertainty; mobile carriers are directly generated (electrons in the acceptor domains and holes in the donor domains) by the ultrafast charge transfer (≈70%) with ≈30% generated by exciton diffusion to a charge separating heterojunction. Sweep-out of the mobile carriers by the internal field prior to recombination is essential for high performance. Bimolecular recombination dominates in materials where the donor and acceptor phases are pure. Impurities degrade performance by introducing Shockly–Read–Hall decay. The review concludes with a summary of the problems to be solved to achieve the predicted power conversion efficiencies of >20% for a single cell.