Development of inhibitory antibodies (inhibitors) to factor VIII (FVIII) is the most serious adverse event in replacement therapy of hemophilia A patients. The etiology and management of this condition remain major challenges for both researchers and clinicians. In the present review, we discuss recent advances in understanding the molecular mechanisms by which inhibitors inactivate FVIII and experimental approaches used for the mapping of inhibitor epitopes. We also present a comparative analysis of treatment of hemophilia A patients with inhibitors with currently available bypassing agents-activated prothrombin complex concentrate (FEIBA VH; Baxter Healthcare Corp., Westlake Village, CA) and recombinant activated factor VII (NovoSeven; Novo Nordisk, Princeton, NJ)-and describe some ongoing research programs aimed at developing new treatment options for these patients. Availability of sensitive and standardized laboratory assays that would assist in monitoring the effectiveness of bypass therapies is essential for designing customized treatment regimens and improvement in the management of health conditions of hemophilia patients with inhibitors.