In the modern business environment, public relations represent one of the most important functions of an organization. Today, organizations invest great efforts to improve their internal and external communication, build their desired image and position themselves among their target audiences using public relations, that is, experts engaged in this profession. As the role, significance and perception of public relations have changed significantly throughout history, for the sake of better understanding of that process, the first part of this paper introduces the beginning and development of public relations through reviews of definitions given by global and Croatian communication experts, key historical events, main theories, and models as well as essential functions of public relations. The second part of this paper includes a more detailed analysis of the role of public relations in business and corporate communication. More specifically, the definition of communication itself and its key elements, concepts of corporate identity, image, and reputation, various functions in internal and external communication, as well as crisis communication. Following on from the theoretical introduction and basis, a research was conducted with the main goal to investigate the perception of public relations in the business community in Croatia in order to determine the general knowledge and understanding of the profession among employees in organizations operating in different sectors and areas.