Many types of mammalian cells can aggregate and differentiate into 3-D multicellular spheroids when cultured in suspension or a nonadhesive environment. Compared to conventional monolayer cultures, multicellular spheroids resemble real tissues better in terms of structural and functional properties. Multicellular spheroids formed by transformed cells are widely used as avascular tumor models for metastasis and invasion research and for therapeutic screening. Many primary or progenitor cells on the other hand, show significantly enhanced viability and functional performance when grown as spheroids. Multicellular spheroids in this aspect are ideal building units for tissue reconstruction. Here we review the current understanding of multicellular spheroid formation mechanisms, their biomedical applications, and recent advances in spheroid culture, manipulation, and analysis techniques.