Direct numerical simulations (DNS) are employed to investigate the effect of free-stream turbulence (FST) on laminar boundary-layer separation and separation control. To model the effects of FST, a numerical method first proposed by Jacobs1 for the generation of isotropic grid turbulence is used. For a laminar separation bubble on a flat plate, which was investigated in wind-tunnel experiments by Gaster,2 it is shown that using low levels of FST in numerical simulations can improve the agreement between experiments and DNS. The characteristics of the fluctuations inside the boundary layer prior to separation agree very well with those reported in experiments and other numerical simulations. Even for the highest turbulent intensity in the free stream (2.5%), which we investigated, the boundary layer is found to separate from the surface and undergo transition to turbulence in the separated shear layer above the wall. In addition, time-dependent flow analysis and comparison between DNS results and linear stability theory reveal that the linear shear-layer instability mechanism (Kelvin-Helmholtz instability) is not bypassed but can be detected in all cases. DNS of active flow control using harmonic blowing and suction through a narrow spanwise slot is shown to significantly reduce separation and delay flow transition. For increased levels of FST, however, the high-amplitude, two-dimensional disturbance waves introduced by the forcing are seen to interact with three-dimensional disturbances inside the boundary layer which results in an accelerated transition process when compared to the uncontrolled case.