The mechanisms and functions of reversible colour change in arthropods are highly diverse despite, or perhaps due to, the presence of an exoskeleton. Physiological colour changes, which have been recorded in 90 arthropod species, are rapid and are the result of changes in the positioning of microstructures or pigments, or in the refractive index of layers in the integument. By contrast, morphological colour changes, documented in 31 species, involve the anabolism or catabolism of components (e.g. pigments) directly related to the observable colour. In this review we highlight the diversity of mechanisms by which reversible colour change occurs and the evolutionary context and diversity of arthropod taxa in which it has been observed. Further, we discuss the functions of reversible colour change so far proposed, review the limited behavioural and ecological data, and argue that the field requires phylogenetically controlled approaches to understanding the evolution of reversible colour change. Finally, we encourage biologists to explore new model systems for colour change and to engage scientists from other disciplines; continued cross-disciplinary collaboration is the most promising approach to this nexus of biology, physics, and chemistry.