Neonates and particularly preterm neonates are frequent recipients of large volumes of blood products relative to their size. Good quality evidence for transfusion practice in this patient group has been lacking but is now increasing. Triggers for red cell transfusion are now better defined, with on-going trials of platelet transfusions likely to yield similar evidence. Transfusion is now extremely safe, but complications such as transfusion associated acute lung injury (TRALI) and transfusion associated circulatory overload (TACO) are likely to be under recognised, particularly in the sick extremely preterm neonate with respiratory symptoms. This review summarises the rationale and current practice with regard to blood component therapy. Background data on component specifications and hazards of transfusion are provided. Indications for transfusion of specific products including red cells, platelets, and plasma are discussed, and their use is illustrated by case examples.