For over 30 years, research has focused on the question of how knowledge is organised in the doctor's mind. The development of encapsulated knowledge, followed by the formation of illness scripts, may both be considered as important stages in the development of medical expertise. This paper reviews research on the knowledge encapsulation and illness script hypotheses since their initial formulation. Findings in support of these views of expertise development are reported and conflicting data are discussed. A great deal of empirical data have been collected over the years to investigate the view that, through clinical experiences, biomedical knowledge becomes encapsulated and eventually integrated into illness scripts. The findings of most studies, which have used various techniques to probe the ways by which students and doctors mentally represent clinical cases, are in line with this view of expertise development. However, there is still debate concerning the role of biomedical knowledge in clinical case processing. To facilitate the development of expertise in medical school, it is important to teach the basic sciences in a clinical context, and to introduce patient problems early in the curriculum in order to support the processes of encapsulation and illness script formation. In addition, during clerkships ample time should be devoted to enabling reflection on patient problems with peers and expert doctors.