In recent years, the cultivation of genetically modified (GM) crops has become a topic of great interest, due in part to the considerable public controversy, which exists concerning their potential benefits or adverse effects. Since the development of the first GM crop about 25 years ago, a diverse range of new cultivars have been released into the environment which were developed by employing advanced molecular techniques to introduce new beneficial genes from a wide variety of sources. While GM crops have great potential for enhancing agricultural production, their potential impacts on soil biota are only partially understood and information on their long-term impact on soil biota is scant. Several recent studies have indicated that GM crops may cause changes in both the invertebrate and microorganism soil biota associated with these crops, with some laboratory-based experiments even revealing transfer of genes from GM plants to native soil bacteria. However, processes such as gene transfer and stable inheritance to subsequent generations remain unproven in natural soil systems. In addition, although significant research efforts have recently been directed towards understanding the effects of GM crops on soil biota, the wide variation in the scientific observations has often hindered an accurate understanding of the issues. Thus, this review collated and synthesized all available information on the microbiological and biochemical effects of GM crops on soil biota with a special focus on GM Bt-cotton. The review also addressed the key issues associated with the use of GM crops including herbicide resistance, transgene flow and explored the plausibility of horizontal gene transfer in soil.