It is now well established that animals use the Earth's magnetic field to perform long-distance migration and other navigational tasks. However, the transduction mechanisms that allow the conversion of magnetic field variations into an electric signal by specialized sensory cells remain largely unknown. Among the species that have been shown to sense Earth-strength magnetic fields, birds have been a model of choice since behavioural tests show that their direction-finding abilities are strongly influenced by magnetic fields. Magnetite, a ferromagnetic mineral, has been found in a wide range of organisms, from bacteria to vertebrates. In birds, both superparamagnetic (SPM) and single-domain magnetite have been found to be associated with the trigeminal nerve. Electrophysiological recordings from cells in the trigeminal ganglion have shown an increase in action potential firing in response to magnetic field changes. More recently, histological evidence has demonstrated the presence of SPM magnetite in the subcutis of the pigeon's upper beak. The aims of the present review are to review the evidence for a magnetite-based mechanism in birds and to introduce physiological concepts in order to refine the proposed models.