Functional analysis of fossils is and should remain a key component of pale
obiological research. Despite recently expressed doubts, conceptual and met
hodological developments over the past 25 years indicate that robust and te
stable claims about function can be produced. Functional statements can be
made in at least three different hierarchical contexts, corresponding to th
e degree of structural information available, the position in the phylogene
tic hierarchy and the degree of anatomical specificity The paradigm approac
h, which dominated thinking about function in the 1960s and 1970s, has been
supplanted with a methodology based on biomechanics. Paleobiomechanics doe
s not assume optimality in organismal design, but determines whether struct
ures were capable of carrying out a given function. The paradigm approach c
an best be viewed as a way of generating, rather than testing, functional h
ypotheses. Hypotheses about function can also be developed and supported by
well-corroborated phylogenetic arguments. Additional functional-evidence c
an be derived from studies of trace fossils and of taphonomy. New computer
techniques, including "Artificial Life" studies, have the potential for pro
ducing far more detailed ideas about function and mode of life than have be
en previously possible. Functional analysis remains the basis for studies o
f the history of adaptation. It is also an essential component of many pale
oecological and paleoenvironmental studies.