The Mediterranean diet is associated with a lower incidence of atherosclerosis, cardiovascular disease, and certain types of cancer. The apparent health benefits have been partially attributed to the dietary consumption of virgin olive oil by Mediterranean populations. Most recent interest has focused on the biologically active phenolic compounds naturally present in virgin olive oils. Studies (human, animal, in vivo and in vitro) have shown that olive oil phenolics have positive effects on certain physiological parameters, such as plasma lipoproteins, oxidative damage, inflammatory markers, platelet and cellular function, and antimicrobial activity. Presumably, regular dietary consumption of virgin olive oil containing phenolic compounds manifests in health benefits associated with a Mediterranean diet. This paper summarizes current knowledge on the physiological effects of olive oil phenolics. Moreover, a number of factors have the ability to affect phenolic concentrations in virgin olive oil, so it is of great importance to understand these factors in order to preserve the essential health promoting benefits of olive oil phenolic compounds.