This paper presents a review of the principal developments in functionally graded materials (FGMs) with an emphasis on the recent work published since 2000. Diverse areas relevant to various aspects of theory and applications of FGM are reflected in this paper. They include homogenization of particulate FGM, heat transfer issues, stress, stability and dynamic analyses, testing, manufacturing and design, applications, and fracture. The critical areas where further research is needed for a successful implementation of FGM in design are outlined in the conclusions.