BCR-ABL is a product of Philadelphia chromosome and is present in 95% of all cases of chronic myelogenous leukemia (CML) and 5-10% of acute lymphoblastic leukemia (ALL). The proto-oncogene, c-Abl, is essential for mouse development and postnatal survival. CML is believed to be caused by the abnormality of a single gene (BCR-ABL) and requires BCR-ABL expression for maintenance of the disease. Imatinib (Gleevec, STI571, or CP57148B), a synthetic inhibitor for Abl kinases, PDGF receptor and c-Kit, has been proven effective in the treatment of CML, especially in chronic phase patients. Yet imatinib is less efficacious in the treatment of blast crisis CML patients and some patients develop drug resistance. This has led to the search for additional inhibitors for combination therapy. The elucidation of the co-crystal structures of Abl with inhibitors and the identification of mutations in BCR-ABL that render imatinib resistance have shed light on the molecular mechanisms for Abl activation and inhibition. This knowledge will facilitate the design of alternative inhibitors for BCR-ABL. This review updates our understanding of the molecular mechanisms of Abl inhibition by intramolecular interactions between different domains, and by intermolecular interactions with proteins and small molecules. Structure-based drug design will expedite the development of new inhibitors that are effective on imatinib-resistant BCR-ABL and that can distinguish endogenous Abl from BCR-ABL.