PDZ domains are small globular building blocks that are amongst the most abundant protein interaction domains in organisms. Over the past several years an avalanche of data has implicated these modules in the clustering, targeting and routing of associating proteins. An overview is given of the types of interactions displayed by PDZ domains and how this relates to the current knowledge on their spatial structure. Furthermore, the different levels on which PDZ--ligand binding can be regulated and the consequences of PDZ domain-mediated clustering for activity, routing and targeting of interacting proteins will be addressed. Finally, some cell and animal models that illustrate the impact of PDZ domain-containing proteins on (multi-) cellular processes will be discussed.