The dramatic sight of a diffuse stream of light stretching across the sky has intrigued people since ancient times, the Greeks and the Romans already suggestively referring to it as the Milky Way. It was only in 1610, however, that Galileo's first spyglass observations produced evidence that our Galaxy is in fact a swarm of faint stars which cannot be resolved with the naked eye. Faint, diffuse, almost elliptical objects have been known ever since under the name of nebulae, but until well into the twentieth century there has been no general agreement about their nature. This was mainly due to the long-standing confusion between the Galactic clouds of ionized gas and the external galaxies, two classes of objects that could only be clearly distinguished through either accurate distance measurements or spectroscopic observations. Owing to the difficulties in carrying out such observations at the required level of accuracy, and even though the hyphotesis that the nebulae are in fact separate ``island universes'' has been put forward in the eighteenth century already by Immanuel Kant, until the 1920s it was by no means clear that any objects existed beyond the boundaries of the Milky Way.
The clinching observation came in 1922, when Edwin Hubble, using the superior optics of the recently-completed 100-inch telescope at Mount Wilson, managed to resolve a few nearby nebulae into stars and established that the brightnesses of a few of those seen in M31 varied in the characteristic periodic manner of Cepheid variables. Using the already-established period-luminosity relation characterizing these stars, he was able to estimate the distance to M31, firmly demonstrating that it was not an element of the Milky Way but a comparable stellar system in its own right, and thus marking the birth of extragalactic astronomy. Since then, Galactic and extragalactic astronomy have been remarkably complementary research fields, and though each has developed its own characteristic methods, the degree to which they have influenced each other cannot be overestimated. Generally speaking, small-scale phenomena are best observed within our Galaxy, where they are sufficiently nearby to be seen clearly. Large-scale galactic structures, on the other hand, are often best observed in external galaxies where we have a clear perspective on the whole system. One of the future major steps towards the understanding of Galactic structure, formation and evolution, the GAIA mission will further demonstrate this principle by significantly contributing to extragalctic astronomy as well through observations of large samples of objects such as stars belonging to Local Group galaxies, nearby galaxies and quasars.