Clustered regulatory interspaced short palindromic repeats (CRISPR) found in bacteria and archaea genome that contains multiple short repeats loci, provides acquired immunity against invading foreign DNA via RNA-guided DNA cleavage. The first inkling of this hot new genetic engineering tool turned up in 1987, when a research team observed an oddly repetitive sequence at one end of a bacterial gene. Now three types of CRISPR/Cas system have been identified: types I, II and III. In the type II CRISPR/Cas9 system, short segments of foreign DNA termed 'spacers' are integrated within the CRISPR genomic loci, transcribed and processed into short CRISPR RNA (crRNA). These crRNAs anneal to trans-activating crRNA (tracrRNA) and direct sequence-specific cleavage in that a double-strand break (DSB) is generated by Cas proteins. Based on these findings, various genetic methods, including gene targeting (Gene disruption), gene insertion, gene correction etc., are being designed to manipulate the genomes of different species at specific loci. Compared with zinc finger nucleases (ZFN) and transcription activator-like effector nucleases (TALEN), CRISPR/Cas9 is simpler with higher specificity and less toxicity. This review summarizes recent progress, discusses the prospects of CRISPR/Cas9 system, with an emphasis on its structure, principle, applications and potential challenges, and provides a useful reference for researchers who are interested in this new technique.