The promise of a reality where intelligent technologies and unobtrusive networks of interconnected electronic devices support individuals in their daily tasks and activities is delivered by the vision of Ambient Intelligence. In order for this vision to be realized modern technology should posse an understanding of a core aspect of human nature, namely emotion. Affective Computing is a multidisciplinary scientific field which has emerged in order to deliver applications which are able to recognize their user's emotion, produce affect sensitive outputs in order to aid them and respond in a human like manner, resulting in a higher level of human machine interaction. This chapter provides a review of current research aiming to offer an insight into affective computing by exploring all key aspects relating to the development of an effective human centered system and by identifying open questions and future research directions for this scientific area.