Atrial fibrillation (AF) and heart failure (HF) commonly coexist, and their co-presence is associated with adverse outcomes relating to thromboembolic events, HF progression, hospitalisation and death. Diastolic dysfunction (DD) is also frequently present in patients with HF and is an independent predictor of hospitalisation and mortality. The presence of DD is a strong predictor of incident AF in patients with HF. In this review, we provide mechanistic insight into pathophysiological processes that frequently promote the occurrence of AF, HF and DD and outline the yin-yang relationship between AF, DD and HF. More recently, invasive studies have also shown that asymptomatic paroxysmal atrial fibrillation (PAF) is a common phenomenon in HF patients. We examine complex inter-relationships between PAF, HF and DD and speculate upon the possible clinical influence of undiagnosed PAF in HF patients.