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Interleukin-38 (IL-38) is the most recent member of the IL-1 family that acts as a natural inflammatory inhibitor by binding to cognate receptors, particularly the IL-36 receptor. In vitro, animal and human studies on autoimmune, metabolic, cardiovascular and allergic diseases, as well sepsis and respiratory viral infections, have shown that IL-38 exerts an anti-inflammatory activity by modulating the generation and function of inflammatory cytokines (e.g. IL-6, IL-8, IL-17 and IL-36) and regulating dendritic cells, M2 macrophages and regulatory T cells (Tregs). Accordingly, IL-38 may possess therapeutic potential for these types of diseases. IL-38 down-regulates CCR3+ eosinophil cells, CRTH2+ Th2 cells, Th17 cells, and innate lymphoid type 2 cells (ILC2), but up-regulates Tregs, and this has influenced the design of immunotherapeutic strategies based on regulatory cells/cytokines for allergic asthma in future studies. In auto-inflammatory diseases, IL-38 alleviates skin inflammation by regulating γδ T cells and limiting the production of IL-17. Due to its ability to suppress IL-1β, IL-6 and IL-36, this cytokine could reduce COVID-19 severity, and might be employed as a therapeutic tool. IL-38 may also influence host immunity and/or the components of the cancer microenvironment, and has been shown to improve the outcome of colorectal cancer, and may participate in tumour progression in lung cancer possibly by modulating CD8 tumour infiltrating T cells and PD-L1 expression. In this review, we first briefly present the biological and immunological functions of IL-38, and then discuss the important roles of IL-38 in various types of diseases, and finally highlight its use in therapeutic strategies.