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Polymer electrolyte membrane (PEM) fuel cells convert chemical energy stored in hydrogen fuel directly and efficiently to electrical energy with water as the only byproduct, potentially reducing energy use, pollutant emissions, and dependence on fossil fuels. Despite advancements, durability and cost remain major barriers to commercialization, with the current cost of $61/kW being over 50% higher than the US Department of Energy's target of $30/kW by 2015. Fundamental research is critical to overcome these barriers, focusing on issues such as water and heat management, and new material development. This review aims to present the latest status of PEM fuel cell technology development and applications, describe the need for fundamental research, and outline major challenges and needs for future research.