Although anemia of chronic disease (ACD) is the most prevalent form of anemia next to iron deficiency anemia, its significance has been overridden by the dominant manifestation of the underlying diseases, i.e. chronic inflammation, infection, organ failure, or malignancy. As the treatment of ACD is being recognized to be important for the restoration of life quality, clinicians should be aware of how to detect, how to discriminate, and how to treat the disease. The key pathophysiology of ACD lies on the trapping of iron in the reticuloendothelial system by pro-inflammatory cytokines. The best treatment of ACD is the treatment of underlying disease per se, which is unfeasible in a substantial portion of the cases. Blood transfusion is occasionally harmful without altering the natural course of underlying disease. The benefit of erythropoietin (EPO) was already established in chronic renal disease. EPO has emerged as an important palliative measure for anemia in a variety of cancers. Augmented supplement of EPO may overcome the blunted response to physiologic EPO in anemia secondary to chronic infection or inflammation. Functional or absolute iron deficiency in ACD is manageable using EPO in conjunction with parenteral iron supplement. The iron deficiency in ACD can be identified by low ferritin value (<30 ug/L) or a high ratio of soluble transferrin receptor/log ferritin (>2). Further studies are required for the elucidation of molecular pathogenesis, more accurate diagnosis and new treatment to mobilize trapped iron into active erythropoiesis. The judicious use of therapeutic options currently available can result in palliation of ACD in a majority of the patients, and every single clinician should be fully aware of the principles behind the palliative measures.