Background Earth system models describe the physical, chemical and biological processes that govern our global climate. While it is difficult to single out one component as being more important than another in these sophisticated models, terrestrial vegetation is a critical player in the biogeochemical and biophysical dynamics of the Earth system. There is much debate, however, as to how plant diversity and function should be represented in these models. Scope Plant functional types (PFTs) have been adopted by modellers to represent broad groupings of plant species that share similar characteristics (e.g. growth form) and roles (e.g. photosynthetic pathway) in ecosystem function. In this review, the PFT concept is traced from its origin in the early 1800s to its current use in regional and global dynamic vegetation models (DVMs). Special attention is given to the representation and parameterization of PFTs and to validation and benchmarking of predicted patterns of vegetation distribution in high-latitude ecosystems. These ecosystems are sensitive to changing climate and thus provide a useful test case for model-based simulations of past, current and future distribution of vegetation. Conclusions Models that incorporate the PFT concept predict many of the emerging patterns of vegetation change in tundra and boreal forests, given known processes of tree mortality, treeline migration and shrub expansion. However, representation of above- and especially below-ground traits for specific PFTs continues to be problematic. Potential solutions include developing trait databases and replacing fixed parameters for PFTs with formulations based on trait co-variance and empirical trait-environment relationships. Surprisingly, despite being important to land-atmosphere interactions of carbon, water and energy, PFTs such as moss and lichen are largely absent from DVMs. Close collaboration among those involved in modelling with the disciplines of taxonomy, biogeography, ecology and remote sensing will be required if we are to overcome these and other shortcomings. © 2014 Published by Oxford University Press on behalf of the Annals of Botany Company 2014. This work is written by (a) US Government employee(s) and is in the public domain in the US.