A nonreducing disaccharide, alpha,alpha-trehalose, accumulates endogenously in diverse anhydrobiotic organisms in their dehydrating process or prior to their desiccation, being thought to have a protective function either as a water replacement molecule or as a vitrification agent in the dry state. Trehalose acts also as a protectant against physiological stress, including freezing, ethanol and oxidation. To elucidate the origin of these different functions of this sugar, it is necessary to obtain a deep insight into the physicochemical properties of trehalose at the molecular level. In this review, we focus our attention on the thermodynamic, hydration and structural properties of carbohydrates, and extract the characteristic feature of trehalose. On the basis of these findings, we subsequently discuss the underlying mechanism for protein stabilization by trehalose in solution and for its anitoxidant function on unsaturated fatty acids.