A brief review of the history of computer-assisted instruction and discussion of the current and potential roles of microcomputers in education introduce this review of the capabilities of state-of-the-art microcomputers and currently available software for them, and some speculations about future trends and developments. A survey of current applications of microcomputers is followed by descriptions of hardware capabilities, including input and output devices and displays, as well as memory, and a review of some representative software for teaching mathematics, language skills, social sciences, natural sciences, and educational games. The status of research on the instructional effectiveness of CAI is briefly discussed, and five prominent studies which show consistent results are cited. Descriptions of near-future technological capabilities include hardware trends, software developments (including high level languages, operating systems, and user interface), artificial intelligence, and programming languages. Changing expectations, potential problems, and educational promise are addressed in a concluding discussion of prospects and pitfalls. A 43-item bibliography is provided. (CHC)