Aberrant T-cell responses underpin a range of diseases, including asthma and allergy and autoimmune diseases. Pivotal immune elements of these diseases are the development of antigen-specific effector T-helper type 2 (Th2) cells, Th1 cells, or the recently defined Th17 cells that are associated with the clinical features and disease progression. In order to identify crucial processes in the pathogenesis of these diseases it is critical to understand how the development of these T cells occurs. The phenotype of a polarized T-cell that differentiates from a naïve precursor is determined by the complex interaction of antigen-presenting cells with naïve T cells and involves a multitude of factors, including the dominant cytokine environment, costimulatory molecules, type and load of antigen presented and a plethora of signaling cascades. The decision to take the immune response in a certain direction is not made by one signal alone, instead many different elements act synergistically, antagonistically and through positive feedback loops to activate a Th1, Th2, or Th17 immune response. The elucidation of the mechanisms of selection of T-cell phenotype will facilitate the development of therapeutic strategies to intervene in the development of deleterious T-cell responses. This review will focus on the pathways and key factors responsible for the differentiation of the various subsets of effector CD4 T cells. We will primarily discuss what is known of the Th1 and Th2 differentiation pathways, while also reviewing the emerging research on Th17 differentiation.