We review some of the highlights of the ISO observing programmes dedicated to the photospheres and winds of late-type stars. The ISO mission has provided for the first time an unbiased view of the gas-phase molecular components in the extended atmospheres of cool stars. The transition region between the photosphere and the cool outer layers was detected by means of spectroscopy. Several new molecules have been discovered. Also, a very rich harvest of new solid state emission bands was discovered. The detection of crystalline silicates in AGB and post-AGB stars is one of the surprises of the ISO mission. ISO also showed that the co-existence of C-rich and O-rich circumstellar material is much more common than previously believed. Observations of AGB stars in the Magellanic Clouds show that C-rich AGB stars can reach very high luminosities.