In the next 3 years the study of astronomical X-ray spectra will make a significant advance owing to the launch of several new instruments. These will represent an order of magnitude improvement in both spectral resolving power and sensitivity over current instruments, and will allow use of plasma diagnostics which have not been previously accessible. In this talk I will illustrate some of the uses of such diagnostics. I will discuss the status of the atomic data available, and point out areas where work is most urgently needed.