The Faraday effect is becoming widely used as an optical method of measuring electric cur-rent or magnetic field. It is particularly advantageous where the measurements must be made at high voltage or in the presence of electromagnetic interference, and where, speed or stability are considerations. In this paper we review the development of the technology over the last twenty years, with an emphasis on the basic principles, design considerations, and performance capabilities of sensors that represent the latest achievements. Faraday effect current sensors are now used routinely in the measurement of large current pulses, and are starting to become available for ac current measurements in the power industry. Recent developments include their extension to the measurement of currents in the milliampere range and substantial reductions in size. Similar devices, in slightly different configurations, can be used for magnetic field measurements. Further improvements, based on new fiber types and new materials, are projected.