BLUF (sensor of blue light using FAD) domain-containing proteins are one of three types of flavin-binding, blue-light-sensing proteins found in many bacteria and some algae. The other types of blue-light-sensing proteins are the cryptochromes and the light, oxygen, voltage (LOV) domain-containing proteins. BLUF proteins control a wide variety of light-dependent physiological activities including photosystem synthesis, biofilm formation and the photoavoidance response. The BLUF domain photochemical reaction is unique in that only small chromophore structural changes are involved in the light activation process, because the rigid flavin moiety is involved, rather than an isomerizable chromophore (e.g. phytochromobilin in phytochromes and retinal in rhodopsins). Recent spectroscopic, biochemical and structural studies have begun to elucidate how BLUF domains transmit the light-induced signal and identify related, subsequent changes in the domain structures. Herein, I review progress made to date concerning the physiological functions and the phototransduction mechanism of BLUF proteins.