Photodynamic therapy (PDT) is a clinically approved and rapidly developing cancer treatment regimen. It is a minimally invasive two-stage procedure that requires administration of a photosensitizing agent followed by illumination of the tumor with visible light usually generated by laser sources. A third component of PDT is molecular oxygen which is required for the most effective antitumor effects. In the presence of the latter, light of an appropriate wavelength excites the photosensitizer thereby producing cytotoxic intermediates that damage cellular structures. PDT has been approved in many countries for the treatment of lung, esophageal, bladder, skin and head and neck cancers. The antitumor effects of this treatment result from the combination of direct tumor cell photodamage, destruction of tumor vasculature and activation of an immune response. The mechanisms of the direct photodamage of tumor cells, the signaling pathways that lead to apoptosis or survival of sublethaly damaged cells, and potential novel strategies of improving the antitumor efficacy of PDT are discussed.