In this paper we study the chord index of virtual knots, which can be thought of as an extension of the chord parity. We show how to use the chord index to define finite type invariants of virtual knots. The notions of indexed Jones polynomial and indexed quandle are introduced, which generalize the classical Jones polynomial and knot quandle respectively. Some applications of these new invariants are discussed. We also study how to define a generalized chord index via a fixed finite biquandle. Finally the chord index and its applications in twisted knot theory are discussed.1991 Mathematics Subject Classification. 57M25, 57M27.