Optical biosensors that exploit surface plasmon resonance, waveguides and resonant mirrors have been used widely over the past decade to analyse biomolecular interactions. These sensors allow the determination of the affinity and kinetics of a wide variety of molecular interactions in real time, without the need for a molecular tag or label. Advances in instrumentation and experimental design have led to the increasing application of optical biosensors in many areas of drug discovery, including target identification, ligand fishing, assay development, lead selection, early ADME and manufacturing quality control. This article reviews important advances in optical-biosensor instrumentation and applications, and also highlights some exciting developments, such as highly multiplexed optical-biosensor arrays.