We review recent experimental and theoretical progress in realizing and simulating many-body phases of ultracold atoms in optical lattices, which gives access to analog quantum simulations of fundamental model Hamiltonians for strongly correlated condensed matter systems, such as the Hubbard model. After a general introduction to quantum gases in optical lattices, their preparation and cooling, and measurement techniques for relevant observables, we focus on several examples, where quantum simulations of this type have been performed successfully during the past years: Mott-insulator states, itinerant quantum magnetism, disorder-induced localization and its interplay with interactions, and topological quantum states in synthetic gauge fields.