Saturn's magnetosphere contains plasma and neutral particles from Saturn's atmosphere, the rings, the inner icy satellites, and Titan. This paper reviews the observations of plasma and neutrals near Saturn. Plasma conditions were observed during the Pioneer 11 and Voyager 1 and 2 flybys of Saturn. Neutral H was observed by the Voyagers; neutral OH has been observed by the Hubble Space Telescope. The attempts which have been made to understand the physical processes behind the data are also discussed. Saturn's magnetosphere is dominated by neutrals, with a neutral to plasma density ratio of about 10. The neutrals are probably produced by bombardment of the moons by micrometeorites and heavy ions, although there is a discrepancy between predicted sputtering rates and the amount of sputtering necessary to produce the observed neutral densities. Transport of plasma out of the magnetosphere must be very fast, of the order of a few days. Models of the processes occurring in Saturn's magnetosphere are used to determine the densities of neutral and plasma species which cannot be directly observed. These results will be tested when Cassini arrives at Saturn in 2004. ¿ 1998 American Geophysical Union