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Dynamic-link library (also written without the hyphen), or DLL, is Microsoft's implementation of the shared library concept in the Microsoft Windows and OS/2 operating systems. These libraries usually have the file extension DLL, OCX (for libraries containing ActiveX controls), or DRV (for legacy system drivers). The file formats for DLLs are the same as for Windows EXE files — that is, Portable Executable (PE) for 32-bit and 64-bit Windows, and New Executable (NE) for 16-bit Windows. As with EXEs, DLLs can contain code, data, and resources, in any combination.

In the broader sense of the term, any data file with the same file format can be called a resource DLL. Examples of such DLLs include icon libraries, sometimes having the extension ICL, and font files, having the extensions FON and FOT

The first versions of Microsoft Windows ran every program in a single address space. Every program was meant to co-operate by yielding the CPU to other programs so that the GUI was capable of multitasking and could be as responsive as possible. All Operating-System level operations were provided by the underlying operating system: MS-DOS. All higher level services were provided by Windows Libraries Dynamic Link Libraries. The Drawing API, GDI, was implemented in a DLL called GDI.EXE, the user interface in USER.EXE. These extra layers on top of DOS had to be shared across all running windows programs, not just to enable Windows to work in a machine with less than a megabyte of RAM, but to enable the programs to co-operate amongst each other. The Graphics Device Interface code in GDI needed to translate drawing commands to operations on specific devices. On the display, it had to manipulate pixels in the frame buffer. When drawing to a printer, the API calls had to be transformed into requests to a printer. Although it could have been possible to provide hard-coded support for a limited set of devices (like the Color Graphics Adapter display, the HP LaserJet Printer Command Language), Microsoft chose a different approach. GDI would work by loading different pieces of code to work with different output devices—pieces of code called 'Device Drivers'.

The same architectural concept that allowed GDI to load different device drivers is that which allowed the Windows shell to load different windows programs, and for these programs to invoke API calls from the shared USER and GDI libraries. That concept was Dynamic Linking.

In a conventional non-shared, static library, sections of code are simply added to the calling program when its executable is built at the linking phase; if two programs call the same routine, the routine is included in both the programs during the linking stage of the two. With dynamic linking, shared code is placed into a single, separate file. The programs that call this file are connected to it at run time, with the operating system (or, in the case of early versions of Windows, the OS-extension), performing the binding.

For those early versions of Windows (1.0 to 3.11), the DLLs were the foundation for the entire GUI.
Display drivers were merely DLLs with a .DRV extension that provided custom implementations of the same drawing API through a unified Device Driver Interface (DDI).
The Drawing (GDI) and GUI (USER) APIs were merely the function calls exported by the GDI and USER, system DLLs with .EXE extension.

This notion of building up the operating system from a collection of dynamically loaded libraries is a core concept of Windows that persists even today. DLLs provide the standard benefits of shared libraries, such as modularity. Modularity allows changes to be made to code and data in a single self-contained DLL shared by several applications without any change to the applications themselves.

Another benefit of the modularity is the use of generic interfaces for plug-ins. A single interface may be developed which allows old as well as new modules to be integrated seamlessly at run-time into pre-existing applications, without any modification to the application itself. This concept of dynamic extensibility is taken to the extreme with the Component Object Model, the underpinnings of ActiveX.

In Windows 1.x, 2.x and 3.x, all windows applications shared the same address space, as well as the same memory. A DLL was only loaded once into this address space; from then on all programs using the library accessed it. The library's data was shared across all the programs. This could be used as an indirect form of Inter-process communication, or it could accidentally corrupt the different programs. With Windows 95 and successors every process runs in its own address space. While the DLL code may be shared, the data is private except where shared data is explicitly requested by the library. That said, large swathes of Windows 95, Windows 98 and Windows Me were built from 16-bit libraries, a feature which limited the performance of the Pentium Pro microprocessor when launched, and ultimately limited the stability and scalability of the DOS-based versions of Windows.

While DLLs are the core of the Windows architecture, they have a number of drawbacks, collectively called "DLL hell".[1] Currently, Microsoft promotes Microsoft .NET as one solution to the problems of DLL hell, although they now promote Virtualization based solutions such as Microsoft Virtual PC and Microsoft Application Virtualization, because they offer superior isolation between applications. An alternative mitigating solution to DLL hell has been the implementation of Side-by-Side Assembly.

In Win32, the DLL files are organized into sections. Each section has its own set of attributes, such as being writable or read-only, executable (for code) or non-executable (for data), and so on.

The code in a DLL is usually shared among all the processes that use the DLL; that is, they occupy a single place in physical memory, and do not take up space in the page file. If the physical memory occupied by a code section is to be reclaimed, its contents are discarded, and later reloaded directly from the DLL file as necessary.

In contrast to code sections, the data sections of a DLL are usually private; that is, each process using the DLL has its own copy of all the DLL's data. Optionally, data sections can be made shared, allowing inter-process communication via this shared memory area. However, because user restrictions do not apply to the use of shared DLL memory, this creates a security hole; namely, one process can corrupt the shared data, which will likely cause all other sharing processes to behave undesirably. For example, a process running under a guest account can in this way corrupt another process running under a privileged account. This is an important reason to avoid the use of shared sections in DLLs.

If a DLL is compressed by certain executable packers (e.g. UPX), all of its code sections are marked as read-and-write, and will be unshared. Read-and-write code sections, much like private data sections, are private to each process. Thus DLLs with shared data sections should not be compressed if they are intended to be used simultaneously by multiple programs, since each program instance would have to carry its own copy of the DLL, resulting in increased memory consumption.