Drosophila's importance as a model organism made it an obvious choice to be among the first genomes sequenced, and the Release 1 sequence of the euchromatic portion of the genome was published in March 2000. This accomplishment demonstrated that a whole genome shotgun (WGS) strategy could produce a reliable metazoan genome sequence. Despite the attention to sequencing methods, the nucleotide sequence is just the starting point for genome-wide analyses; at a minimum, the genome sequence must be interpreted using expressed sequence tag (EST) and complementary DNA (cDNA) evidence and computational tools to identify genes and predict the structures of their RNA and protein products. The functions of these products and the manner in which their expression and activities are controlled must then be assessed—a much more challenging task with no clear endpoint that requires a wide variety of experimental and computational methods. We first review the current state of the Drosophila melanogaster genome sequence and its structural annotation and then briefly summarize some promising approaches that are being taken to achieve an initial functional annotation.