Confocal endomicroscopy (CEM) is a recent advancement in imaging technology that incorporates a confocal laser microscope into the tip of a flexible endoscope. The 1000-fold magnification and high resolution allows for real time in vivo histology or "virtual biopsies" of the gastrointestinal tract mucosa. CEM has the capability to instantaneously diagnose intra-epithelial neoplasia during endoscopy, alone or in combination with a "red-flag" technique, such as chromoendoscopy. Therefore, there is clinical utility in the surveillance or diagnosis of Barrett's esophagus, gastric intestinal metaplasia and cancer, longstanding ulcerative colitis, and colonic neoplasia. Furthermore, CEM also appears to be useful in the evaluation of coeliac disease, microscopic colitis, and in diagnosing Helicobacter pylori chronic gastritis. This review examines the current available data on the utility of this new technology in clinical gastroenterology and its potential impact in the future.