Estimates of external costs of transport are quoted in important political and statistical documents. However, some theoretical and methodological aspects of the definition of external costs are still unclear. The paper discusses some of these issues. In the first part of the paper, having analysed the concept of external costs, and assessed its dependence on the institutional set up and on the assumption about altruism and information, the paper proposes a distinction between external costs and social costs. The former is associated with efficiency analysis, the latter with cost-efficiency analysis. The two concepts are then discussed with specific reference to external costs caused by transport activities. The second part of the paper reviews and discusses the main methodological uncertainties connected with the estimation of external cost of air pollution, congestion and accidents. It is argued that because of methodological and data constraints there appears to be insufficient knowledge on marginal external cost, whereas average social costs are better known.