Even though entanglement is very vulnerable to interactions with the environment, it can be created by purely dissipative processes. Yet, the attainable degree of entanglement is profoundly limited in the presence of noise sources. We show that distillation can also be realized dissipatively, such that a highly entangled steady state is obtained. The schemes put forward here display counterintuitive phenomena, such as improved performance if noise is added to the system. We also show how dissipative distillation can be employed in a continuous quantum repeater architecture, in which the resources scale polynomially with the distance.