Thyroid eye disease (TED) is an autoimmune disorder of the orbit, usually occurring in association with autoimmune Graves’ disease. Both adaptive and innate immune systems are involved. The exact triggers for the disease remain elusive, but genetic susceptibility and environmental factors are both implicated in dysregulation of self-tolerance mechanisms. Humoral and cellular autoimmunity leads to activation of orbital fibroblasts, which are the main effector cells that produce the pathological manifestations of TED. At a molecular level, circulating antibodies against the thyroid stimulating hormone receptor bind to the receptor, triggering a signalling cascade in which co-signalling with the insulin-like growth factor 1 receptor also occurs. Improved understanding of these pathways is providing targets for biologic drugs against TED. The mechanisms by which the immune system changes translate into the clinical pathology of TED are complex. The anatomy of the orbit contributes to the pathophysiology, with the ‘cone theory’ of TED describing how distribution of mechanical pressure within the closed bony confines of the orbit is instrumental in the manifestation of the disease. Oxidative stress also plays a role. Improved understanding of the role of the microbiome in autoimmune disease may offer some explanation of why particular individuals with otherwise similar genetics and environmental exposures may or may not manifest TED, but research into this is in its early phases.