Clinical situations for which penicillin is indicated as the sole effective treatment are not infrequent and may be increasing in incidence. Penicillin allergy in these circumstances complicates their medical management. The proper evaluation of penicillin allergy is thus crucial to making decisions about alternative antibiotic therapy vs penicillin and the need for desensitization in allergic individuals. The combination of skin testing and assessment of the type of previous penicillin allergic reaction allows designation of patients into those at high risk and those at low risk for subsequent reactions. Penicillin allergy may also complicate the management of infections in which a cephalosporin is the preferred treatment. The available data on cross-reactivity and concurrent hypersensitivity involving these antibiotics and penicillin are incomplete. The current and past literature were reviewed in an attempt to develop practical treatment approaches and to identify clinical questions that need further investigation related to penicillin allergy.