Within the last decade, a number of nucleic acid-based gene targeting strategies have been developed with the ultimate goal to cure human genetic disorders caused by mutations. Thus far, site-directed gene targeting is the only procedure that can make predefined alterations in the genome. The advantage of this approach is that expression of the corrected gene is regulated in the same way as a normal gene. In addition, targeted specific mutations can be made in the genome for functional analysis of proteins. Several approaches, including chimeric RNA-DNA oligonucleotides, short single-stranded oligonucleotides, small fragment homologous replacements, and triple-helix-forming oligonucleotides have been used for targeted modification of the genome. Due to the absence of standardized assays and mechanistic studies in the early developmental stages of oligonucleotide-directed gene alteration, it has been difficult to explain the large variations and discrepancies reported. Here, we evaluate the progress in the field, summarize the achievements in understanding the molecular mechanism, and outline the perspective for the future development. This review will emphasize the importance of reliable, sensitive and standardized assays to measure frequencies of gene repair and the use of these assays in mechanistic studies. Such studies have become critical for understanding the gene repair process and setting realistic expectations on the capability of this technology. The conventionally accepted but unproven dogmas of the mechanism of gene repair are challenged and alternative points of view are presented. Another important focus of this review is the development of general selection procedures that are required for practical application of this technology.