Daily rhythms in behavior, physiology and metabolism are controlled by endogenous circadian clocks. At the heart of these clocks is a circadian oscillator that keeps circadian time, is entrained by environmental cues such as light and activates rhythmic outputs at the appropriate time of day. Genetic and molecular analyses in Drosophila have revealed important insights into the molecules and mechanisms underlying circadian oscillator function in all organisms. In this review I will describe the intracellular feedback loops that form the core of the Drosophila circadian oscillator and consider how they are entrained by environmental light cycles, where they operate within the fly and how they are thought to control overt rhythms in physiology and behavior. I will also discuss where work remains to be done to give a comprehensive picture of the circadian clock in Drosophila and likely many other organisms.