Hepatopulmonary syndrome (HPS) is a pulmonary vascular complication of liver disease, which adversely affects prognosis. The disease is characterised by intrapulmonary vascular dilatations and shunts, resulting in impaired gas exchange. A complex interaction between the liver, the gut and the lungs, predominately impacting pulmonary endothelial cells, immune cells and respiratory epithelial cells, is responsible for the development of typical pulmonary alterations seen in HPS. Liver transplantation is the only therapeutic option and generally reverses HPS. Since the implementation of the model for end-stage liver disease (MELD) standard exception policy, outcomes in patients with HPS have been significantly better than they were in the pre-MELD era. This review summarises current knowledge and highlights what’s new regarding the diagnosis and management of HPS, and our understanding of pathogenesis based on experimental models and translational studies.