Demographical changes in high income counties will increase the need of health care services but reduce the number of people to provide them. Welfare technology is launched as an important measure to meet this challenge. As with all types of technologies we must explore its ethical challenges. A literature review reveals that welfare technology is a generic term for a heterogeneous group of technologies and there are few studies documenting their efficacy, effectiveness and efficiency. Many kinds of welfare technology break with the traditional organization of health care. It introduces technology in new areas, such as in private homes, and it provides new functions, e.g. offering social stimuli and entertainment. At the same time welfare technology is developed for groups that traditionally have not been extensive technology users. This raises a series of ethical questions with regard to the development and use of welfare technologies, which are presented in this review. The main challenges identified are: (1) Alienation when advanced technology is used at home, (2) conflicting goals, as welfare technologies have many stakeholders with several ends, (3) respecting confidentiality and privacy when third-party actors are involved, (4) guaranteeing equal access and just distribution, and (5) handling conflicts between instrumental rationality and care in terms of respecting dignity and vulnerability. Addressing these issues is important for developing and implementing welfare technologies in a morally acceptable manner.