The term 'visual adaptation' describes the processes by which the visual system alters its operating properties in response to changes in the environment. These continual adjustments in sensory processing are diagnostic as to the computational principles underlying the neural coding of information and can have profound consequences for our perceptual experience. New physiological and psychophysical data, along with emerging statistical and computational models, make this an opportune time to bring together experimental and theoretical perspectives. Here, we discuss functional ideas about adaptation in the light of recent data and identify exciting directions for future research.