Periphyton communities have received relatively little attention in lake ecosystems. However, evidence is increasing that they play a key role in primary productivity, nutrient cycling, and food web interactions. This review summarizes those findings and places them in a conceptual framework to evaluate the functional importance of periphyton in lakes. The role of periphyton is conceptualized based on a spatial hierarchy. At the coarsest scale, landscape properties such as lake morphometry, influence the amount of available habitat for periphyton growth. Watershed-related properties, such as loading of dissolved organic matter, nutrients, and sediments influence light availability and hence periphyton productivity. At the finer scale of within the lake, both habitat availability and habitat type affect periphyton growth and abundance. In addition, periphyton and phytoplankton compete for available resources at the within-lake scale. Our review indicates that periphyton plays an important functional role in lake nutrient cycles and food webs, especially under such conditions as relatively shallow depths, nutrient-poor conditions, or high water-column transparency. We recommend more studies assessing periphyton function across a spectrum of lake morphometry and trophic conditions.