Linear and nonlinear theoretical aspects of parametric instabilities in plasmas are reviewed. Applications in laser‐fusion and heating of toroidally confined plasmas are considered. We start with the electrostatic decay and modulational instabilities in homogeneous, unmagnetized plasmas. The basic equations are derived in a physically simple manner. Electromagnetic modes are included using a wave description for the scattering instabilities (Raman and Brillouin scattering). Kinetic limits where quasi‐modes are involved (Compton scattering) and the corresponding instabilities in magnetic plasmas are discussed. Using a WKB‐analysis the effects of density, temperature, and expansion velocity gradients as well as turbulence, finite laser bandwidth, boundaries, and oblique incidence are estimated. The calculations are extended to include such phenomena as sidescattering and decay near the quartercritical and critical density where the WKB approximation breaks down. Nonlinear saturation mechanisms are discussed for Raman, Brillouin, decay, and modulational instabilities. Special attention is given to pump depletion and particle trapping. The existence of solitary waves and the stability of the latter are investigated. The conclusions are compared with results of experiments as well as computer simulations.