This paper focuses on the use of Basque as the language of instruction. In the first part of the article the situation of Basque in the Basque Country is briefly described and the different possibilities regarding the language(s) of instruction are explained: model A with Spanish as the language of instruction and Basque as a subject; model B with both Basque and Spanish as languages of instruction and model D with Basque as the language of instruction and Spanish as a subject. Then, the results of research studies comparing these three models regarding achievement in Basque, Spanish and other areas of the curriculum are analysed. Finally the article considers the new challenges the Basque educational system is facing. One of these challenges is the need to go from bilingual education to multilingual education by teaching in a more effective way languages of wider communication. Another recent challenge is multiculturalism as a response to the increasing immigrant population which is a new phenomenon in the Basque educational system. The need for a more holistic approach towards multilingualism both in teaching and research is proposed so as to face these new challenges.