In recent years, circular RNAs (circRNAs) – a novel class of RNA molecules characterized by their covalently closed circular structure – have emerged as a complex family of eukaryotic transcripts with important biological features. Besides their peculiar structure, which makes them particularly stable molecules, they have attracted much interest because their expression is strongly tissue and cell specific. Moreover, many circRNAs are conserved across eukaryotes, localized in particular subcellular compartments, and can play disparate molecular functions. The discovery of circRNAs has therefore added not only another layer of gene expression regulation but also an additional degree of complexity to our understanding of the structure, function and evolution of eukaryotic genomes. In this Review, we summarize current knowledge of circRNAs and discuss the possible functions of circRNAs in cell differentiation and development.