Inflammation induced anemia and resistance to erythropoietin are common features in patients with chronic kidney disease (CKD). Elevated levels of cytokines and enhanced oxidative stress, conditions associated with inflammatory states, are implicated in the development of anemia. Accumulating evidence suggests that activation of cytokine cascade and the associated acute-phase response, as it often occurs in patients with CKD, divert iron from erythropoiesis to storage sites within the reticuloendothelial system leading to functional iron deficiency and subsequently to anemia or resistance to erythropoietin. Other processes have also been shown to be involved in the pathogenesis of anemia provoked by the activated immune system including an inhibition of erythroid progenitor proliferation and differentiation, a suppression of erythropoietin production and a blunted response to erythropoietin. The present review concerns the underlying alterations in iron metabolism induced by chronic inflammation that result in anemia.