The CD95 ligand is involved as a death factor in the regulation of activation-induced cell death, establishment of immune privilege and tumor cell survival. In addition, CD95L may serve as a costimulatory molecule for T-cell activation. Alterations in expression or shedding of membrane and soluble CD95L are associated with numerous diseases, and underscore the pathophysiological relevance of the CD95/CD95L system. In most cases, the causal link between altered CD95L expression and pathophysiology is unknown. Given the potency of the molecule to regulate death and survival of many different cell types, the control of CD95L production, transport, storage, shedding and inactivation is of tremendous biological and clinical interest. This review summarizes the current knowledge, hypotheses and controversies about CD95L as a multifunctional ligand and receptor. It considers the different roles of membrane and soluble forms of CD95L and the complex networks of intracellular dynamics of protein trafficking, as well as the potential bidirectional signal transduction capacity of CD95L, with a focus on molecular interactions that have been worked out over the past years.