Bacteria and archaea have evolved an adaptive immune system, known as type II prokaryotic clustered regularly interspaced short palindromic repeats (CRISPR)/CRISPR-associated (Cas) system, which uses short RNA to direct the degradation of target sequences present in invading viral and plasmid DNAs. Recent advances in CRISPR/Cas system provide an improved method for genome editing, showing robust and specific RNA-guided endonuclease activity at targeted endogenous genomic loci. It is the latest technology to modify genome DNA specifically and effectively following zinc finger nucleases (ZFNs) and TALE nucleases (TALENs). Compared with ZFNs and TALENs, CRISPR/Cas is much simpler and easier to engineer. This review summarizes recent progress, and discusses the prospects of CRISPR/Cas system, with an emphasis on its structure, principle, applications and potential challenges.