Over the past decade, there has been a substantial increase in the use of financial incentives by private employers and public programs to encourage healthy behaviors, wellness activities, and use of preventive services. The research evidence regarding the effectiveness of this approach is reviewed, summarizing relevant findings from literature reviews and from recent evaluations. The article concludes that financial incentives, even relatively small incentives, can influence individuals' health-related behaviors. However, the findings regarding health promotion and wellness are based primarily on analyses of a limited number of private sector initiatives, whereas the evidence regarding preventive services is based on evaluations of initiatives sponsored predominantly by public programs and directed at low-income populations. In either case, there are several important limitations in the ability of the published findings to provide clear guidance for public program administrators or private purchasers seeking to design and implement effective incentive programs.