Observations were made of the reflective properties of the iridophore stripes of the squid Alloteuthis subulata and Loligo vulgaris, and the likely functions of these stripes are considered in terms of concealment and signalling. In both species, the mantle muscle is almost transparent. Stripes of iridophores run along the length of each side of the mantle, some of which, when viewed at normal incidence in white light, reflect red, others green or blue. When viewed obliquely, the wavebands best reflected move towards the blue/ultraviolet end of the spectrum and their reflections are almost 100% polarised. These are properties of quarter-wavelength stacks of chitin and cytoplasm, predicted in theoretical analyses made by Sir A. F. Huxley and Professor M. F. Land. The reflecting surfaces of the individual iridophores are almost flat and, in a given stripe, these surfaces are within a few degrees of being parallel. Both species of squid have conspicuous, brightly coloured reflectors above their eyes. These 'eyespots' have iridescent layers similar to those found on the mantle but are overlaid by a green fluorescent layer that does not change colour or become polarised as it is viewed more obliquely. In the sea, all reflections from the iridophore stripes will be largely confined to the blue-green parts of the spectrum and all reflections in other wavebands, such as those in the red and near ultraviolet, will be weak. The functions of the iridophores reflecting red at normal incidence must be sought in their reflections of blue-green at oblique angles of incidence. These squid rely for their camouflage mainly on their transparency, and the ventral iridophores and the red, green and blue reflective stripes must be used mainly for signalling. The reflectivities of some of these stripes are relatively low, allowing a large fraction of the incident light to be transmitted into the mantle cavity. Despite their low reflectivities, the stripes are very conspicuous when viewed from some limited directions because they reflect light from directions for which the radiances are much higher than those of the backgrounds against which they are viewed. The reflective patterns seen, for example, by neighbouring squid when schooling depend on the orientation of the squid in the external light field and the position of the squid relative to these neighbours.