Physiological jaundice is a common condition encountered in almost two third of neonates. It occurs due to complex interaction of many factors. In this review we have discussed mainly the physiological basis for its development. In newborns, if bilirubin level is more than physiological level, it may cause bilirubin encephalopathy (kernicterus), a deleterious neurological outcome. Then why nature has selected jaundice, a common condition in newborns. Perhaps nature has tried to use the antioxidant property of bilirubin and biliverdin to protect newborns that face storm of oxidative stress after birth.