In the past year, there have been major advances in our understanding of the mechanisms of action of somatostatin. The cloning and characterizing of genes encoding five structurally similar somatostatin receptors and their transfection into cells have allowed identification of analogues that are receptor-subtype specific. There is now a significant opportunity for the development of somatostatin analogues that are targeted more specifically to the individual tissue or hormone that is in excess. Work continues to demonstrate the antiproliferative action of somatostatin on tumor cells; however, there have been examples of tumor cell-line proliferation in response to somatostatin. This highlights the need for caution in the use of somatostatin analogues as adjuncts to other chemotherapeutic agents, even in somatostatin receptor-positive tumors. The role of; somatostatin in the diagnosis of neuroendocrine tumors is to define the position and extent, and studies continue to support its role in this area. It is the functional characterization of the receptor genes, however, that represents the most significant advance. This characterization may change somatostatin-analogue therapy from its current use as a general endocrine “off switch” to a more targeted treatment that is used only when the receptor-subtype status of the tumor has been established. In this setting, somatostatin analogues may rank among the most specific therapeutic agents at our disposal.