Microscopic colitis (MC) is an inflammatory disease of the large intestine associated with urgent watery diarrhoea. MC may occur in people of all ages, although the disease primarily affects older women. Once believed to be rare, MC is now known to be a common cause of chronic watery diarrhoea in high-income countries, affecting 1 in 115 women and 1 in 286 men during their lifetime in Swedish population-based estimates. An inappropriate immune response to disturbances in the gut microenvironment is implicated in the pathogenesis of MC. Evidence also supports an underlying genetic basis for disease. The diagnosis of MC relies on clinical symptoms and microscopic assessment of colonic biopsy samples. MC is categorized histologically into collagenous colitis, lymphocytic colitis and their incomplete forms. The mainstay of treatment includes the use of budesonide, with or without adjunctive therapies, and withdrawal of offending drugs. Emerging studies suggest a role for biologicals and immunosuppressive therapies for the management of budesonide-refractory or budesonide-dependent disease. MC can have a substantial negative effect on patient quality of life. The outlook for MC includes a better understanding of the immune response, genetics and the microbiome in disease pathogenesis along with progress in disease management through robust clinical trials.