Polymer electrolyte membrane (PEM) fuel cells, which convert the chemical energy stored in hydrogen fuel directly and efficiently to electrical energy with water as the only byproduct, have the potential to reduce our energy use, pollutant emissions, and dependence on fossil fuels. Great deal of efforts has been made in the past, particularly during the last couple of decades or so, to advance the PEM fuel cell technology and fundamental research. Factors such as durability and cost still remain as the major barriers to fuel cell commercialization. In the past two years, more than 35% cost reduction has been achieved in fuel cell fabrication, the current status of $61/kW (2009) for transportation fuel cell is still over 50% higher than the target of the US Department of Energy (DOE), i.e. $30/kW by 2015, in order to compete with the conventional technology of internal-combustion engines. In addition, a lifetime of similar to 2500 h (for transportation PEM fuel cells) was achieved in 2009, yet still needs to be doubled to meet the DOE's target, i.e. 5000 h. Breakthroughs are urgently needed to overcome these barriers. In this regard, fundamental studies play an important and indeed critical role. Issues such as water and heat management, and new material development remain the focus of fuel-cell performance improvement and cost reduction. Previous reviews mostly focus on one aspect, either a specific fuel cell application or a particular area of fuel cell research. The objective of this review is three folds: (1) to present the latest status of PEM fuel cell technology development and applications in the transportation, stationary, and portable/micro power generation sectors through an overview of the state-of-the-art and most recent technical progress; (2) to describe the need for fundamental research in this field and fill the gap of addressing the role of fundamental research in fuel cell technology; and (3) to outline major challenges in fuel cell technology development and the needs for fundamental research for the near future and prior to fuel cell commercialization. (C) 2010 Elsevier Ltd. All rights reserved.