Serum albumin concentration (CP) is a remarkably strong prognostic indicator of morbidity and mortality in both sick and seemingly healthy subjects. Surprisingly, the specifics of the pathophysiology underlying the relationship between CP and ill-health are poorly understood. This review provides a summary that is not previously available in the literature, concerning how synthesis, catabolism, and renal and gastrointestinal clearance of albumin interact to bring about albumin homeostasis, with a focus on the clinical factors that influence this homeostasis. In normal humans, the albumin turnover time of about 25 days reflects a liver albumin synthesis rate of about 10.5 g/day balanced by renal (≈6%), gastrointestinal (≈10%), and catabolic (≈84%) clearances. The acute development of hypoalbuminemia with sepsis or trauma results from increased albumin capillary permeability leading to redistribution of albumin from the vascular to interstitial space. The best understood mechanism of chronic hypoalbuminemia is the decreased albumin synthesis observed in liver disease. Decreased albumin production also accounts for hypoalbuminemia observed with a low-protein and normal caloric diet. However, a calorie- and protein-deficient diet does not reduce albumin synthesis and is not associated with hypoalbuminemia, and CP is not a useful marker of malnutrition. In most disease states other than liver disease, albumin synthesis is normal or increased, and hypoalbuminemia reflects an enhanced rate of albumin turnover resulting either from an increased rate of catabolism (a poorly understood phenomenon) or enhanced loss of albumin into the urine (nephrosis) or intestine (protein-losing enteropathy). The latter may occur with subtle intestinal pathology and hence may be more prevalent than commonly appreciated. Clinically, reduced CP appears to be a result rather than a cause of ill-health, and therapy designed to increase CP has limited benefit. The ubiquitous occurrence of hypoalbuminemia in disease states limits the diagnostic utility of the CP measurement.