Despite the common wisdom that inertia does not contribute to microfluidic phenomena, recent work has shown a variety of useful effects that depend on fluid inertia for applications in enhanced mixing, particle separation, and bioparticle focusing. Due to the robust, fault-tolerant physical effects employed and high rates of operation, inertial microfluidic systems are poised to have a critical impact on high-throughput separation applications in environmental cleanup and physiological fluids processing, as well as bioparticle focusing applications in clinical diagnostics. In this review I will discuss the recent accelerated progress in developing prototype inertial microfluidic systems for a variety of applications and attempt to clarify the fundamental fluid dynamic effects that are being exploited. Finally, since this a nascent area of research, I will suggest some future promising directions exploiting fluid inertia on the microscale.