Fuel cell system is an advanced power system for the future that is sustainable, clean and environmental friendly. The importance of fuel cell as the future power system is discussed in the light of future fossil fuel depletion, impending international law on green house gases control and the national renewable energy policy. The modern development of the proton exchange membrane fuel cell (PEMFC) for the last 20 years is then briefly reviewed and the current status of international and national research and development of this type of are established. The review also discuss the remaining research and development issues that still need to be resolved before these fuel cells are available for commercial application. The main thrust in PEMFC research and development is to lower the cost of the fuel cell by reduction in membrane and electrocatalyst costs. Although Europe, USA, Canada and Japan are leading fuel cell research and development as commercialization, it is not too late for Malaysia to master this technology and to apply it to niche markets in the future.