The potential energy stored in multiply charged ions is liberated when the ions recombine during impact on a solid surface. For certain target species this can lead to a novel form of ion–induced sputtering, which, in analogy to the usual kinetic sputtering, has been termed ‘potential sputtering’. This sputtering process is characterized by a strong dependence of the observed sputtering yields on the charge state of the impinging ion and can take place at ion–impact energies well below the kinetic sputtering threshold. We summarize a series of recent careful experiments in which potential sputtering has been investigated for hyperthermal highly charged ion's impact on various surfaces (e.g. Au, LiF, NaCl, SiO2, Al2O3 and MgO), present the different models proposed to explain the potential sputtering phenomenon and also discuss possible applications of potential sputtering for nanostructure fabrication.