In the law of the European Union, direct effect is the principle that Union law may, if appropriately framed, confer rights on individuals which not only the courts but also the public administration (on national, regional or local level) of member states of the European Union are bound to recognise and enforce.

Direct effect is not explicitly stated in any of the EU Treaties. The principle of direct effect was first established by the Court of Justice of the European Union (CJEU) in Van Gend en Loos v. Nederlandse Administratie der Belastingen. Direct effect has subsequently been loosened in its application to treaty articles and the ECJ has expanded the principle, holding that it is capable of applying to virtually all of the possible forms of EU legislation, the most important of which are regulations, and in certain circumstances to directives.

The ECJ first articulated the doctrine of direct effect in the case of Van Gend en Loos, the European Court of Justice laid down the criteria (commonly referred to as the "Van Gend criteria") for establishing direct effect. The EU article provision had to be:

If these criteria were satisfied, then the right or rights in question could be enforced before national courts. Whether or not any particular measure satisfies the criteria is a matter of EU law to be determined by the EU Courts.

In Van Gend en Loos it was decided that a citizen was able to enforce a right granted by European Community legislation against the state – the question of whether rights could be enforced against another citizen was not addressed. In Defrenne v. SABENA (No. 2), the European Court of Justice decided that there were two varieties of direct effect: vertical direct effect and horizontal direct effect, the distinction drawn being based on the person or entity against whom the right is to be enforced.

Vertical direct effect concerns the relationship between EU law and national law – specifically, the state's obligation to ensure its observance and its compatibility with EU law, thereby enabling citizens to rely on it in actions against the state or against public bodies; an "emanation of the state" as defined in Foster v. British Gas plc.

Horizontal direct effect concerns the relationship between individuals (including companies). If a certain provision of EU law is horizontally directly effective, then citizens are able to rely on it in actions against each other. This indicates that a citizen is able to rely on a provision from the EU law against another citizen before the national court. These obligations can create rights for or be imposed on citizens in the Member State. Unlike treaty articles and regulations, Directives are usually incapable of being horizontally directly effective. Certain provisions of the treaties and legislative acts such as regulations are capable of being directly enforced horizontally.

Direct effect is applicable when the particular provision relied on fulfils the Van Gend en Loos criteria. It is therefore applicable in the case of treaty articles (Van Gend en Loos was a claim based on a treaty article), in which case it can be both vertically and horizontally directly effective.