Facultative paedomorphosis is an environmentally induced polymorphism that results in the coexistence of mature, gilled, and fully aquatic paedomorphic adults and transformed, terrestrial, metamorphic adults in the same population. This polymorphism has been of interest to scientists for decades because it occurs in a large number of caudate amphibian taxa as well as in a large diversity of habitats. Numerous experimental and observational studies have been conducted to explain the proximate and ultimate factors affecting these heterochronic variants in natural populations. The production of each alternative phenotype is based on a genotype×environment interaction and research suggests that differences in the environment can produce paedomorphs through several ontogenetic pathways. No single advantage accounts for the maintenance of this polymorphism. Rather, the interplay of different costs and benefits explains the success of the polyphenism across variable environments. Facultative paedomorphosis allows individuals to cope with habitat variation, to take advantage of environmental heterogeneity in the presence of open niches, and to increase their fitness. This process is expected to constitute a first step towards speciation events, and is also an example of biodiversity at the intraspecific level. The facultative paedomorphosis system is thus ripe for future studies encompassing ecology, evolution, behaviour, endocrinology, physiology, and conservation biology. Few other systems have been broad enough to provide varied research opportunities on topics as diverse as phenotypic plasticity, speciation, mating behaviour, and hormonal regulation of morphology. Further research on facultative paedomorphosis will provide needed insight into these and other important questions facing biologists.