Health literacy is a relatively new concept in health promotion. It is a composite term to describe a range of outcomes to health education and communication activities. From this perspective, health education is directed towards improving health literacy. This paper identifies the failings of past educational programs to address social and economic determinants of health, and traces the subsequent reduction in the role of health education in contemporary health promotion. These perceived failings may have led to significant underestimation of the potential role of health education in addressing the social determinants of health. A ‘health outcome model’ is presented. This model highlights health literacy as a key outcome from health education. Examination of the concept of health literacy identifies distinctions between functional health literacy, interactive health literacy and critical health literacy. Through this analysis, improving health literacy meant more than transmitting information, and developing skills to be able to read pamphlets and successfully make appointments. By improving people's access to health information and their capacity to use it effectively, it is argued that improved health literacy is critical to empowerment. The implications for the content and method of contemporary health education and communication are then considered. Emphasis is given to more personal forms of communication, and community-based educational outreach, as well as the political content of health education, focussed on better equipping people to overcome structural barriers to health.