Third-generation aromatase inhibitors, letrozole, anastrozole, and exemestane, are active and well tolerated in postmenopausal patients with hormone-sensitive advanced or metastatic breast cancer, as either first- or second-line therapy. These agents are being investigated as neoadjuvant therapy of locally advanced breast cancer and as adjuvant therapy of early breast cancer. In a large neoadjuvant study, letrozole resulted in significantly more responses than tamoxifen, with significantly more patients becoming eligible for breast-conserving surgery. Greater letrozole responses were associated with high and low levels of estrogen receptor expression and with coexpression of ErbB-1 and/or ErbB-2. Neoadjuvant anastrozole, in two studies, was also significantly superior to tamoxifen in rendering patients eligible for breast-conserving surgery. In the adjuvant setting, the Arimidex, Tamoxifen Alone or in Combination trial compared 5 years of anastrozole versus tamoxifen versus the combination. At 47 months' median follow-up, disease-free survival was significantly improved with anastrozole compared with the other arms. In the Intergroup Exemestane Study, switching to exemestane after 2 to 3 years of tamoxifen significantly improved disease-free survival compared with remaining on tamoxifen for 5 years. The MA.17 trial evaluated switching to letrozole versus placebo following 5 years of adjuvant tamoxifen, and letrozole was significantly superior to placebo in disease-free survival. While all three aromatase inhibitors as adjuvant therapy were well tolerated, long-term effects on bone health and lipids are being monitored. Ongoing trials will better define the optimum use of aromatase inhibitors as adjuvant therapy.