Radio frequency identification (RFID) mandates by the U.S. Department of Defense (DoD) and many of the top worldwide retailers, including Wal-Mart, Target, Tesco, and Metro, have created new challenges for packaging. For optimum performance, RFID tags require minimal interference from liquids, metals, and other RF absorbent and reflective materials. Product packaging must be designed from the beginning to enable optimum RFID performance. The Packaging and RFID Program within the Auto-ID Labs of MIT is leading the design and development of tools, knowledge, and packaging design principles for the application and use of RFID systems. This paper highlights the 2004 research achievements of the Packaging and RFID Program and describes the challenges of incorporating RFID into product packaging that will be addressed in 2005.