On-line analysis of exhaled breath offers insight into a person's metabolism without the need for sample preparation or sample collection. Due to its noninvasive nature and the possibility to sample continuously, the analysis of breath has great clinical potential. The unique features of this technology make it an attractive candidate for applications in medicine, beyond the task of diagnosis. We review the current methodologies for on-line breath analysis, discuss current and future applications, and critically evaluate challenges and pitfalls such as the need for standardization. Special emphasis is given to the use of the technology in diagnosing respiratory diseases, potential niche applications, and the promise of breath analysis for personalized medicine. The analytical methodologies used range from very small and low-cost chemical sensors, which are ideal for continuous monitoring of disease status, to optical spectroscopy and state-of-the-art, high-resolution mass spectrometry. The latter can be utilized for untargeted analysis of exhaled breath, with the capability to identify hitherto unknown molecules. The interpretation of the resulting big data sets is complex and often constrained due to a limited number of participants. Even larger data sets will be needed for assessing reproducibility and for validation of biomarker candidates. In addition, molecular structures and quantification of compounds are generally not easily available from on-line measurements and require complementary measurements, for example, a separation method coupled to mass spectrometry. Furthermore, a lack of standardization still hampers the application of the technique to screen larger cohorts of patients. This review summarizes the present status and continuous improvements of the principal on-line breath analysis methods and evaluates obstacles for their wider application.