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Many developing countries face the decision of whether to approve the testing and commercial use of insecticidal transgenic cotton and the task of developing adequate regulations for its use. In this review, we outline concepts and provide information to assist farmers, regulators and scientists in making decisions concerning this technology. We address seven critical topics: 1) molecular and breeding techniques used for the development of transgenic cotton cultivars, 2) properties of transgenic cotton cultivars and their efficacy against major insect pests, 3) agronomic performance of transgenic cotton in developing countries, 4) factors affecting transgene expression, 5) impact of gene flow between transgenic and non-transgenic cotton, 6) non-target effects of transgenic cotton, and 7) management of pest resistance to transgenic cotton.