The chemical senses-smell and taste-allow animals to evaluate and distinguish valuable food resources from dangerous substances in the environment. The central mechanisms by which the brain recognizes and discriminates attractive and repulsive odorants and tastants, and makes behavioral decisions accordingly, are not well understood in any organism. Recent molecular and neuroanatomical advances in Drosophila have produced a nearly complete picture of the peripheral neuroanatomy and function of smell and taste in this insect. Neurophysiological experiments have begun to provide insight into the mechanisms by which these animals process chemosensory cues. Given the considerable anatomical and functional homology in smell and taste pathways in all higher animals, experimental approaches in Drosophila will likely provide broad insights into the problem of sensory coding. Here we provide a critical review of the recent literature in this field and comment on likely future directions.