Fossils of chironomid larvae (non-biting midges) preserved in lake sediments are well-established palaeotemperature indicators which, with the aid of numerical chironomid-based inference models (transfer functions), can provide quantitative estimates of past temperature change. This approach to temperature reconstruction relies on the strong relationship between air and lake surface water temperature and the distribution of individual chironomid taxa (species, species groups, genera) that has been observed in different climate regions (arctic, subarctic, temperate and tropical) in both the Northern and Southern hemisphere. A major complicating factor for the use of chironomids for palaeoclimate reconstruction which increases the uncertainty associated with chironomid-based temperature estimates is that the exact nature of the mechanism responsible for the strong relationship between temperature and chironomid assemblages in lakes remains uncertain. While a number of authors have provided state of the art overviews of fossil chironomid palaeoecology and the use of chironomids for temperature reconstruction, few have focused on examining the ecological basis for this approach. Here, we review the nature of the relationship between chironomids and temperature based on the available ecological evidence. After discussing many of the surveys describing the distribution of chironomid taxa in lake surface sediments in relation to temperature, we also examine evidence from laboratory and field studies exploring the effects of temperature on chironomid physiology, life cycles and behaviour. We show that, even though a direct influence of water temperature on chironomid development, growth and survival is well described, chironomid palaeoclimatology is presently faced with the paradoxical situation that the relationship between chironomid distribution and temperature seems strongest in relatively deep, thermally stratified lakes in temperate and subarctic regions in which the benthic chironomid fauna lives largely decoupled from the direct influence of air and surface water temperature. This finding suggests that indirect effects of temperature on physical and chemical characteristics of lakes play an important role in determining the distribution of lake-living chironomid larvae. However, we also demonstrate that no single indirect mechanism has been identified that can explain the strong relationship between chironomid distribution and temperature in all regions and datasets presently available. This observation contrasts with the previously published hypothesis that climatic effects on lake nutrient status and productivity may be largely responsible for the apparent correlation between chironomid assemblage distribution and temperature. We conclude our review by summarizing the implications of our findings for chironomid-based palaeoclimatology and by pointing towards further avenues of research necessary to improve our mechanistic understanding of the chironomid-temperature relationship.