Penalty cards are used in many sports as a means of warning, reprimanding or penalising a player, coach or team official. Penalty cards are most commonly used by referees or umpires to indicate that a player has committed an offence. The official will hold the card above their head while looking or pointing toward the player who has committed the offence. This action makes the decision clear to all players, as well as spectators and other officials in a manner that is language-neutral. The colour or shape of the card used by the official indicates the type or seriousness of the offence and the level of punishment that is to be applied. Yellow and red cards are the most common, typically indicating, respectively, cautions and dismissals.

The idea of using a universal language – neutral coloured cards – to communicate a referee's intentions originated in association football, with English referee Ken Aston. Aston had been appointed to the FIFA Referees' Committee and was responsible for all referees at the 1966 FIFA World Cup. In the quarter-finals, England played Argentina at Wembley Stadium. After the match, newspaper reports stated that referee Rudolf Kreitlein had cautioned Englishmen Bobby and Jack Charlton, as well as sent off Argentinian Antonio Rattín. The referee had not made his decision clear during the game, so England manager Alf Ramsey approached a FIFA representative for post-match clarification. This incident started Aston thinking about ways to make a referee's decisions clearer to both players and spectators. Aston realised that a colour-coding scheme based on the same principle as used on traffic lights (yellow – stop if safe to do so, red – stop) would transcend language barriers and make it clear that a player had been cautioned or expelled. As a result, yellow cards to indicate a caution and red cards to indicate an expulsion were used for the first time in the 1970 FIFA World Cup in Mexico. The use of penalty cards has since been adopted and expanded by several sporting codes, with each sport adapting the idea to its specific set of rules or laws.

A yellow card is used in many different sporting codes. Its meaning differs among sports; however, it most commonly indicates a caution given to a player regarding their conduct, or indicates a temporary suspension. Examples include:

In association football, a yellow card is shown by the referee to indicate that a player has been officially cautioned. The player's details are then recorded by the referee in a small notebook; hence a caution is also known as a "booking". A player who has been cautioned may continue playing in the game; however, a player who receives a second caution in a match is sent off (shown the yellow card again, and then a red card), meaning that they must leave the field immediately and take no further part in the game. The player may not be replaced by a substitute. Law 12 of the Laws of the Game (which are set by the International Football Association Board and used by FIFA) lists the types of offences and misconduct that may result in a caution or is cautionary. Law 12 was amended in 2019 to allow team officials, such as head coaches, to also receive yellow and red cards. It also states that "only a player, substitute, substituted player or team official" can be cautioned. A player is usually given a one-match suspension (although it can be more for certain circumstances) after accumulating two yellow cards in a match. The same is generally applied to team officials.

In most tournaments, the accumulation of a certain number of yellow cards over several matches results in disqualification of the offending player for a certain number of subsequent matches, the exact number of cards and matches varying by jurisdiction.

In track events, a yellow card is used as a personal warning in both track and field events used to indicate that a second yellow card followed by a red card would result in a disqualification. World Athletics rules have abolished false start warnings; false starts now result in immediate disqualification except in combined events where a diagonal yellow/black card indicates a warning for false start. However, as of 2012, the false start rule is that an athlete's hands must leave the track or their feet must leave the starting blocks before the gunshot in order for a false start to be given. Therefore, if an athlete makes a twitch, while being in their final 'set' position, the maximum penalty is a yellow card.

In Australian rules football, a yellow card is issued against a player for committing any reportable offence (such as striking an opponent, swearing at an official, amongst others), except those listed as 'serious' reportable offences. Any player issued a yellow card is unable to participate in the game for the length of a quarter of play, excluding breaks, although the player can be replaced. However, a yellow card may be issued against a player at the discretion of an umpire, despite the player not committing a reportable offence. Yellow cards and red cards are, however, not issued in the Australian Football League, the highest level of play in Australian rules football.

In badminton, a yellow card is given to a singles player or doubles pair as a warning for breaching the Laws of Badminton. A yellow card can only be given once to a player or pair in a match; subsequent breaches are sanctioned with a red or black card.