Rates of genetic improvement in dairy cattle breeding programmes have increased substantially in the last decade, not only in Europe where there has been substantial immigration of North American stock. More accurate statistical evaluation procedures, including the use of best linear unbiased prediction (BLUP) with the animal model, have been introduced; higher selection intensities have been achieved, particularly on production traits, through better organized and focused schemes; and developments in multiple ovulation and embryo transfer (MOET) have been both a stimulus and to some extent a cause. Continued rapid improvement can be expected as research and development enables more accurate and timely use to be made of recording data, because there is evidence that heritability values for milk production are rising, perhaps because of better cow management, and as competition among breeders internationally increases. There are a number of consequent challenges to geneticists and breeders. Attention will have to be given to maintaining the fitness of very high producing animals by recording health, fertility, longevity and parlour traits, and using the results of research to give them appropriate weight in selection decisions. Developments in molecular methods and in reproductive technologies present new opportunities, but are unlikely to do more for some time than complement progress from conventional selection on the important production traits.