Magnetoencephalography (MEG) records weak magnetic fields outside the human head and thereby provides millisecond-accurate information about neuronal currents supporting human brain function. MEG and electroencephalography (EEG) are closely related complementary methods and should be interpreted together whenever possible. This manuscript covers the basic physical and physiological principles of MEG and discusses the main aspects of state-of-the-art MEG data analysis. We provide guidelines for best practices of patient preparation, stimulus presentation, MEG data collection and analysis, as well as for MEG interpretation in routine clinical examinations. In 2017, about 200 whole-scalp MEG devices were in operation worldwide, many of them located in clinical environments. Yet, the established clinical indications for MEG examinations remain few, mainly restricted to the diagnostics of epilepsy and to preoperative functional evaluation of neurosurgical patients. We are confident that the extensive ongoing basic MEG research indicates potential for the evaluation of neurological and psychiatric syndromes, developmental disorders, and the integrity of cortical brain networks after stroke. Basic and clinical research is, thus, paving way for new clinical applications to be identified by an increasing number of practitioners of MEG.