Quantitative structure-activity relationships (QSAR) have been applied for decades in the development of relationships between physicochemical properties of chemical substances and their biological activities to obtain a reliable statistical model for prediction of the activities of new chemical entities. The fundamental principle underlying the formalism is that the difference in structural properties is responsible for the variations in biological activities of the compounds. In the classical QSAR studies, affinities of ligands to their binding sites, inhibition constants, rate constants, and other biological end points, with atomic, group or molecular properties such as lipophilicity, polarizability, electronic and steric properties (Hansch analysis) or with certain structural features (Free-Wilson analysis) have been correlated. However such an approach has only a limited utility for designing a new molecule due to the lack of consideration of the 3D structure of the molecules. 3D-QSAR has emerged as a natural extension to the classical Hansch and Free-Wilson approaches, which exploits the three-dimensional properties of the ligands to predict their biological activities using robust chemometric techniques such as PLS, G/PLS, ANN etc. It has served as a valuable predictive tool in the design of pharmaceuticals and agrochemicals. Although the trial and error factor involved in the development of a new drug cannot be ignored completely, QSAR certainly decreases the number of compounds to be synthesized by facilitating the selection of the most promising candidates. Several success stories of QSAR have attracted the medicinal chemists to investigate the relationships of structural properties with biological activity. This review seeks to provide a bird's eye view of the different 3D-QSAR approaches employed within the current drug discovery community to construct predictive structure-activity relationships and also discusses the limitations that are fundamental to these approaches, as well as those that might be overcome with the improved strategies. The components involved in building a useful 3D-QSAR model are discussed, including the validation techniques available for this purpose.