Transgenic cotton carrying the insect-resistant (Bacillus thuringiensis: B.t.) gene was commercialized in 1996. Because B.t. toxin genes have proven efficacious in conferring Lepidopteran resistance in cotton, B.t. cotton is expected to reduce chemical insecticide use. Herbicide-resistant varieties for Buctril(R)*, Roundup(R), and several other herbicides are under development and are expected to reach the market by 1997 or 1998. Stress resistance and fiber improvements are the next targets for biotechnology. These events, although long overdue, mark a turning point in the cotton industry. Genetic engineering to confer useful agronomic and fiber traits is likely to lower the cost of production, improve yield and quality, and promote environmentally friendly farm practices. Additional progress in these areas is likely to be achieved in shorter periods of time than before, due to new developments in gene identification and transformation technologies. Several genes for stress resistance and fiber modifications are being tested in various laboratories. New genes for insect and herbicide resistance are being sought. A strategy to modify fiber using metabolic pathway engineering to produce aliphatic polyester compounds is under development. Particle bombardment technology has been developed to introduce and test genes in elite varieties of cotton, without the need for regeneration or other tissue culture practices and backcrossing. These developments will lead to improved agronomical and fiber traits in cotton and enable the industry to expand its market share.