The polymerization dynamics of microtubules are central to their biological functions. Polymerization dynamics allow microtubules to adopt spatial arrangements that can change rapidly in response to cellular needs and, in some cases, to perform mechanical work. Microtubules utilize the energy of GTP hydrolysis to fuel a unique polymerization mechanism termed dynamic instability. In this review, we first describe progress toward understanding the mechanism of dynamic instability of pure tubulin and then discuss the function and regulation of microtubule dynamic instability in living cells.