The immense growth of MEDLINE coupled with the realization that a vast amount of biomedical knowledge is recorded in free-text format, has led to the appearance of a large number of literature mining techniques aiming to extract biomedical terms and their inter-relations from the scientific literature. Ontologies have been extensively utilized in the biomedical domain either as controlled vocabularies or to provide the framework for mapping relations between concepts in biology and medicine. Literature-based approaches and ontologies have been used in the past for the purpose of hypothesis generation in connection with drug discovery. Here, we review the application of literature mining and ontology modeling and traversal to the area of drug repurposing (DR). In recent years, DR has emerged as a noteworthy alternative to the traditional drug development process, in response to the decreased productivity of the biopharmaceutical industry. Thus, systematic approaches to DR have been developed, involving a variety of in silico, genomic and high-throughput screening technologies. Attempts to integrate literature mining with other types of data arising from the use of these technologies as well as visualization tools assisting in the discovery of novel associations between existing drugs and new indications will also be presented.