Endoscopic diagnosis currently relies on the ability of the operator to visualize abnormal patterns in the image created by light reflected from the mucosal surface of the gastrointestinal tract. Advances in fiber optics, light sources, detectors, and molecular biology have led to the development of several novel methods for tissue evaluation in situ. The term "optical biopsy" refers to methods that use the properties of light to enable the operator to make an instant diagnosis at endoscopy, previously possible only by using histological or cytological analysis. Promising imaging techniques include fluorescence endoscopy, optical coherence tomography, confocal microendoscopy, and molecular imaging. Point detection schemes under development include light scattering and Raman spectroscopy. Such advanced diagnostic methods go beyond standard endoscopic techniques by offering improved image resolution, contrast, and tissue penetration and providing biochemical and molecular information about mucosal disease. This review describes the basic biophysics of light-tissue interactions, assesses the strengths and weaknesses of each method, and examines clinical and preclinical evidence for each approach.