We develop a theory of existence and uniqueness for the following porous medium equation with fractional diffusion,We consider data f ∈ L 1 (R N ) and all exponents 0 < σ < 2 and m > 0. Existence and uniqueness of a weak solution is established for m > m * = (N − σ) + /N , giving rise to an L 1 -contraction semigroup. In addition, we obtain the main qualitative properties of these solutions. In the lower range 0 < m ≤ m * existence and uniqueness of solutions with good properties happen under some restrictions, and the properties are different from the case above m * . We also study the dependence of solutions on f, m and σ. Moreover, we consider the above questions for the problem posed in a bounded domain.2000 Mathematics Subject Classification. 26A33, 35A05, 35K55, 76S05