Neuropsychological and neuroimaging studies have generated a wealth of data demonstrating structural and functional brain changes, as well as cognitive deficits in drug addicted populations. Despite this, it is often difficult to make generalisations or conclusive statements about the neuropsychological and neurobiological correlates of chronic drug use given variations in the nature or extent of deficits observed within or across different classes of drugs. In this review, we focus specifically on the evidence for impairments in prefrontally-mediated cognitive functions that underlie behavioural regulation, namely decision making and inhibitory control. We argue that impairments in these specific domains, which are often compounded by an earlier initiation of drug use, polydrug abuse, comorbid psychiatric conditions, previous head injury, and acute withdrawal effects can serve to increase the risk for making decisions that are impulsive, focussed on short-terms gains and lack inhibitory control. We further argue that these impairments of prefrontal functioning may underpin the compulsive and 'loss-of-control' pattern of drug-seeking and drug-taking that is characteristic of drug addiction. Finally, we consider the implications of these findings for diagnosis, treatment and prevention, suggesting that a comprehensive understanding of the nature and extent of these cognitive deficits should form a core part of the conceptualization and focus of effective treatment.