Until recently, all approved multiple sclerosis (MS) disease treatments were administered parenterally. Oral fingolimod was approved in September 2010 by the US Food and Drug Administration to reduce relapses and disability progression in relapsing forms of MS. In the clinical trials that led to approval, fingolimod reduced not only acute relapses and magnetic resonance imaging lesion activity but also disability progression and brain volume loss, suggesting preservation of tissue. Fingolimod's mechanism of action in MS is not known with certainty. Its active form, fingolimod-phosphate (fingolimod-P), is a sphingosine 1-phosphate receptor (S1PR) modulator that inhibits egress of lymphocytes from lymph nodes and their recirculation, potentially reducing trafficking of pathogenic cells into the central nervous system (CNS). Fingolimod also readily penetrates the CNS, and fingolimod-P formed in situ may have direct effects on neural cells. Fingolimod potently inhibits the MS animal model, experimental autoimmune encephalomyelitis, but is ineffective in mice with selective deficiency of the S1P1 S1PR subtype on astrocytes despite normal expression in the immune compartment. These findings suggest that S1PR modulation by fingolimod in both the immune system and CNS, producing a combination of beneficial anti-inflammatory and possibly neuroprotective/reparative effects, may contribute to its efficacy in MS. In clinical trials, fingolimod was generally safe and well tolerated. Its interaction with S1PRs in a variety of tissues largely accounts for the reported adverse effects, which were seen more frequently with doses 2.5 to 10× the approved 0.5mg dose. Fingolimod's unique mechanism of action distinguishes it from all other currently approved MS therapies. Ann Neurol 2011;69:759–777