Markdown in WordPress 3.2?

Sadly, I can't help you with up-to-date plugins as WordPress went on a Markdown plugin massacre spree in 2019. The intent appears to be to leave the Markdown module in Jetpack as the only working solution in the plugin repository.

The solution I am using with both WordPress 4.9.x and 5.8.x is Robin Adrianse's Parsedown for WordPress. It converts all posts and comments to HTML on display. It's a bit tricky for very complex posts as all posts are parsed as Markdown first (HTML is still parsed as HTML is part of Markdown spec) but for comments it works without any issues. Either Markdown or HTML comments are supported, transparently. Nothing is permanently converted. Whatever you type in is converted to HTML on display.

I recommend switching to plain text editor to avoid any cross-conversion/parsing issues with the TinyMCE editor or more specifically WordPress's own reparsing of text. There are no performance issues I can see if one is using a caching plugin (who the heck isn't in 2021).

I specify Robin Adrianse's version of Parsedown as there are several other versions which go too far, converting HTML to Markdown permanently. Parsedown supports footnotes among other advanced features. It's a fantastic flexible and powerful flavour of Markdown.

Here is three years later updated answer, for others landing here from Google (like I did once):

Markdown on Save plugin, mentioned in Michal Mau's answers wasn't updated and supported for certain period of time. Now, it seems back on line. In the mean time, it has got a twin plugin, called [Markdown on Save Improved](Markdown on Save Improved), which offers more options.

However, this twin-plugin is no longer supported, in favor of Markdown module for Jetpack. So, if you're starting your yourney with Markdown today (middle of 2014), you should first interest yourself in Jetpack, which -- aside of Markdown -- will bring a lot of Wordpress.com goodies to your self-hosted blog.

Note, that Markdown on Save and Markdown on Save Improved extensions are often used with Markdown QuickTags extension, which gives user an abillity to use keyboard shortcuts, for example Ctrl + I for outlining selected text with * * and thus making it written in cursive or Ctrl + B for surrounding it with ** ** and this making it bold.

Jetpack's Markdown module comes with a handy toolbar that replaces non-visual editor default toolbar with buttons corresponding to Markdown. However, at least in current version (Jetpack 3.0) it hasn't got any support for keyboard shortcut. So, if you prefer (as Markdown QuickTags's tagline says: "less clicking, more writing"), you need to fall back to Markdown QuickTags even though this extension wasn't updated for over two years and seems to be abandoned.

What about Markdown on Save by WordPress lead dev Mark Jaquith?

Allows you to compose content in Markdown on a per-item basis. The markdown version is stored separately, so you can deactivate this plugin any time.

Compatible up to 3.3 attow.