This paper addresses the issue of the relationship between World Englishes (WE) and applied linguistics. The diffusion of English is seen in terms of three concentric circles: the Inner Circle (first-language varieties, e.g., the United States, United Kingdom), the Outer Circle (English-as-a-Second-Language varieties), and the Expanding Circle (English-as-a-Foreign-Language varieties). The discussion is essentially restricted to the Outer Circle in which the institutionalized non-native varieties of English are used in multilingual and multicultural contexts, and focuses on four major issues, including: theoretical, applied, societal, and ideological. The paper is divided into the following sections: ontological issues; conflict between idealization and reality; acquisition and creativity; the "leaking paradigms"; cultural content of English; ideological change; where applied linguistics fails the Outer Circle of English; and types of fallacies about WEs. (Author/JL)