The present review summarises the potential nutritional and physiological functions of betaine as a feed additive in relation to performance criteria in livestock production. Betaine, the trimethyl derivative of the amino acid glycine, is a metabolite of plant and animal tissues. In plants, betaine is particularly synthesised and accumulated as an osmoprotectant against salt and temperature stress. In animals, betaine is the product of choline oxidation or it originates from nutritional sources. Over the past decades, numerous studies have been carried out to investigate the potential effects of betaine supplementation on animal performance. Due to its chemical structure, betaine shows the characteristics of a dipolar zwitterion resulting in osmoprotective properties. Promoting effects on the intestinal tract against osmotic stress occurring during diarrhoea or coccidiosis have been reported following betaine supplementation in pigs and poultry. There is also some evidence that dietary betaine may improve the digestibility of specific nutrients. As a product of choline oxidation, betaine is involved in transmethylation reactions of the organism. Betaine as a methyl donor provides its labile methyl groups for the synthesis of several metabolically active substances such as creatine and carnitine. Supplementation with betaine may decrease the requirement for other methyl donors such as methionine and choline. There is also some evidence for enhanced methionine availability after dietary supplementation of betaine resulting in improved animal performance. Alterations in the distribution pattern of protein and fat in the body have been reported following betaine supplementation. A more efficient use of dietary protein may result from a methionine-sparing effect of betaine, but also direct interactions of betaine with metabolism-regulating factors have to be considered. Though the mode of action of betaine as a carcass modifier remains open, there is, however, growing evidence that betaine could have a positive impact both on animal performance and carcass quality.