Postmenopausal hormonal therapy is used to manage the climacteric symptoms that impair the quality of life of a substantial number of women. The difficulty is achieving the desired effects with minimal side-effects and no adverse health risks. Fundamental to this is understanding the physiology of oestrogen in women and the metabolism of the therapeutic compounds. Although the effects of oral oestrogen therapy have been studied extensively, there is insufficient evidence to assess adequately the independent effects of progestin use, other oestrogen compounds, differing doses and duration of treatment. We have reviewed some basic concepts of oestrogen physiology and how these relate to exogenous oestrogen administration, the risks of greatest concern, and the role of androgens and newer treatment alternatives.