  Being the most extreme explosions in the universe, gamma-ray bursts (GRBs)
provide a unique laboratory to study various plasma physics phenomena. The
complex lightcurve and broad-band, non-thermal spectra indicate a very
complicated system on the one hand, but on the other hand provide a wealth of
information to study it. In this chapter I focus on recent progress in some of
the key unsolved physical problems. These include: (1) Particle acceleration
and magnetic field generation in shock waves; (2) Possible role of strong
magnetic fields in accelerating the plasmas, and accelerating particles via
magnetic reconnection process; (3) Various radiative processes that shape the
observed lightcurve and spectra, both during the prompt and the afterglow
phases, and finally (4) GRB environments and their possible observational
signature.
