In excavators, backhoes, presses, forklifts, cranes, and other hydraulic machinery, the fluid is the medium for power transmission. Rotary power at the input shaft of a pump is converted to fluid power in the form of flow and pressure. The resulting power is used to control machine motion, actuate cylinders, and drive hydraulic motors. Pumps, valves, seals, and other system components have surfaces that move relative to each other, often at high speeds, pressures, and temperatures. These components require cooling and lubrication for efficient performance and durability. Consequently, hydraulic fluids not only must transmit power, they serve critical functions as lubricant and heat transfer mediums. Most hydraulic fluids consist of a base fluid and additives that are designed to impart chemical characteristics and functionality to the finished product. The major compositional categories of hydraulic fluids include mineral oils, synthetic esters, polyglycols, vegetable oils, and water-containing emulsions. Operating conditions and equipment builder specifications generally dictate the performance requirements and thus, the types of base stocks and additives employed. The following chapter provides an overview of the performance requirements of hydraulic fluids. More than 70 ASTM, ISO, and military standards are referenced. The test methods and performance standards that are described include oxidation stability, wear protection, corrosion inhibition, shear stability, particle analysis, air release, demulsibility, filterability, efficiency, and biodegradability. This information provides a basis for qualification and selection of hydraulic fluids, which is key to reliable and efficient hydraulic system performance.