In dentistry, palladium is a very common component of dental casting alloys of all types, and its use has increased over the past several decades in response to the increased cost of gold. However, there have been recent controversies, particularly in Germany, over possible adverse biological effects of using palladium in dental alloys. Therefore, the purpose of this paper is to review the known biological effects of palladium and the likelihood that these effects can be caused by dental alloys which contain palladium. In an ionic form and at sufficiently high concentrations, palladium has toxic and allergic effects on biological systems. Palladium allergy almost always occurs in individuals who are sensitive to nickel. The carcinogenic potential of the palladium ion is still unclear, although there is some evidence that it is capable of acting as a mutagen. However, there are no well documented cases of adverse biological reactions to palladium in the metallic state. Furthermore, in spite of the potential adverse biological effects of palladium ions, the risk of using palladium in dental casting alloys appears to be extremely low because of the low dissolution rate of palladium ions from these alloys.