Enhanced external counterpulsation (EECP) has been shown to reduce angina and to improve objective measures of myocardial ischemia in patients with refractory angina. Prospective clinical studies and large treatment registries suggest that a course of EECP is associated with prolongation of the time to exercise-induced ST-segment depression and resolution of myocardial perfusion defects, as well as with enhanced exercise tolerance and quality of life. With a growing knowledge base supporting the safety and beneficial clinical effects associated with EECP, this therapy can be considered a valuable treatment option, particularly in patients who have exhausted traditional revascularization methods and yet remain symptomatic despite optimal medical care. However, although the concept of external counterpulsation was introduced almost four decades ago, and despite growing evidence supporting the clinical benefit and safety of this therapeutic modality, little is firmly established regarding the mechanisms responsible for the beneficial effects associated with this technique. Suggested mechanisms contributing to the clinical benefit of EECP include improvement in endothelial function, promotion of coronary collateralization, enhancement of ventricular function, peripheral effects similar to those observed with regular physical exercise, and nonspecific placebo effects. This review summarizes the current evidence for a contribution of these mechanisms to the clinical benefit associated with EECP.