Major goal of structural biology involve formation of protein-ligand complexes; in which the protein molecules act energetically in the course of binding. Therefore, perceptive of protein-ligand interaction will be very important for structure based drug design. Lack of knowledge of 3D structures has hindered efforts to understand the binding specificities of ligands with protein. With increasing in modeling software and the growing number of known protein structures, homology modeling is rapidly becoming the method of choice for obtaining 3D coordinates of proteins. Homology modeling is a representation of the similarity of environmental residues at topologically corresponding positions in the reference proteins. In the absence of experimental data, model building on the basis of a known 3D structure of a homologous protein is at present the only reliable method to obtain the structural information. Knowledge of the 3D structures of proteins provides invaluable insights into the molecular basis of their functions. The recent advances in homology modeling, particularly in detecting and aligning sequences with template structures, distant homologues, modeling of loops and side chains as well as detecting errors in a model contributed to consistent prediction of protein structure, which was not possible even several years ago. This review focused on the features and a role of homology modeling in predicting protein structure and described current developments in this field with victorious applications at the different stages of the drug design and discovery.