A discussion of drug-receptor theory is used to show that the three-dimensional structure, or shape, of molecules is important for biological activity. The computer-assisted molecular modeling system at Merck is described, and it is shown that this system is useful for generating and storing molecular structures, determining preferred conformation, comparing molecular shapes, and computing molecular properties. Applications of the system to the study of anti-inflammatory drugs, somatostatin-like compounds, and dihydrofolate reductase inhibitors are summarized.