A significant number of tropical cyclones move into the midlatitudes and transform into extratropical cyclones. This process is generally referred to as extratropical transition (ET). During ET a cyclone frequently produces intense rainfall and strong winds and has increased forward motion, so that such systems pose a serious threat to land and maritime activities. Changes in the structure of a system as it evolves from a tropical to an extratropical cyclone during ET necessitate changes in forecast strategies. In this paper a brief climatology of ET is given and the challenges associated with forecasting extratropical transition are described in terms of the forecast variables (track, intensity, surface winds, precipitation) and their impacts (flooding, bush fires, ocean response). The problems associated with the numerical prediction of ET are discussed. A comprehensive review of the current understanding of the processes involved in ET is presented. Classifications of extratropical transition are described and potential vorticity thinking is presented as an aid to understanding ET. Further sections discuss the interaction between a tropical cyclone and the midlatitude environment, the role of latent heat release, convection and the underlying surface in ET, the structural changes due to frontogenesis, the mechanisms responsible for precipitation, and the energy budget during ET. Finally, a summary of the future directions for research into ET is given.