There is an increasing interest in iterative reconstruction (IR) as a key tool to improve quality and increase applicability of x-ray CT imaging. IR has the ability to significantly reduce patient dose; it provides the flexibility to reconstruct images from arbitrary x-ray system geometries and allows one to include detailed models of photon transport and detection physics to accurately correct for a wide variety of image degrading effects. This paper reviews discretization issues and modelling of finite spatial resolution, Compton scatter in the scanned object, data noise and the energy spectrum. The widespread implementation of IR with a highly accurate model-based correction, however, still requires significant effort. In addition, new hardware will provide new opportunities and challenges to improve CT with new modelling.