The problem of relativistic modelling of GAIA observations is reviewed. Basic principles of the relativistic model and its overall structure are described in detail. All relativistic effects which may amount to 1 μas are revealed and discussed. It is argued that relativistic definitions of astrometric parameters (position, parallax, proper motion, radial velocity, etc.) consistent with an accuracy of 1 μas should be considered only within a well-defined algorithm of relativistic reduction of observational data.