The use of amniotic membrane (or amnion) for transplantation as graft in ocular surface reconstruction is reviewed. This technique has become widespread because of the availability of the amnion, convenience and ease of use, and high and reproducible success rates. The mechanisms of action of the transplantation are varied and include the prolongation and clonogenic maintenance of epithelial progenitor cells, promotion of goblet and non-goblet cell differentiation, exclusion of inflammatory cells with anti-protease activities, suppression of Transforming Growth Factor Beta signaling and myoblast differentiation of normal fibroblasts. The observed clinical effects include facilitation of epithelialization, maintenance of normal phenotypes, and reduction of inflammation, vascularization and scarring. Amniotic membrane transplantation is being increasingly used as graft for various conjunctival and corneal diseases and as a patch in cases of chemical and thermal burns, refractory and recalcitrant keratitis, and most recently as an excellent substrate for expanding epithelial stem cells ex vivo.