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Escherichia coli is classified as a rod-shaped, Gram-negative bacterium in the family Enterobacteriaceae. The bacterium mainly inhabits the lower intestinal tract of warm-blooded animals, including humans, and is often discharged into the environment through faeces or wastewater effluent. The presence of E. coli in environmental waters has long been considered as an indicator of recent faecal pollution. However, numerous recent studies have reported that some specific strains of E. coli can survive for long periods of time, and potentially reproduce, in extraintestinal environments. This indicates that E. coli can be integrated into indigenous microbial communities in the environment. This naturalization phenomenon calls into question the reliability of E. coli as a faecal indicator bacterium (FIB). Recently, many studies reported that E. coli populations in the environment are affected by ambient environmental conditions affecting their long-term survival. Large-scale studies of population genetics revealed the diversity and complexity of E. coli strains in various environments, which are affected by multiple environmental factors. This review examines the current knowledge on the ecology of E. coli strains in various environments with regard to its role as a FIB and as a naturalized member of indigenous microbial communities. Special emphasis is given on the growth of pathogenic E. coli in the environment, and the population genetics of environmental members of the genus Escherichia. The impact of environmental E. coli on water quality and public health is also discussed.