The TMEM16 family of membrane proteins displays a remarkable functional dichotomy - while some family members function as Ca2+-activated anion channels, the majority of characterized TMEM16 homologs are Ca2+-activated lipid scramblases, which catalyze the exchange of phospholipids between the two membrane leaflets. Furthermore, some TMEM16 scramblases can also function as channels. Due to their involvement in important physiological processes, the family has been actively studied ever since their molecular identity was unraveled. In this review, we will summarize the recent advances in the field and how they influenced our view of TMEM16 family function and evolution. Structural, functional and computational studies reveal how relatively small rearrangements in the permeation pathway are responsible for the observed functional duality: while TMEM16 scramblases can adopt both ion- and lipid conductive conformations, TMEM16 channels can only populate the former. Recent data further provides the molecular details of a stepwise activation mechanism, which is initiated by Ca2+ binding and modulated by various cellular factors, including lipids. TMEM16 function and the surrounding membrane properties are inextricably intertwined, with the protein inducing bilayer deformations associated with scrambling, while the surrounding lipids modulate TMEM16 conformation and activity.