A non-invasive diagnostic tool that can identify diseased tissue sites in situ and in real time could have a major impact on the detection and treatment of cancer and atherosclerosis. A review of the research performed on the utilization of laser induced fluorescence spectroscopy (LIFS) as a means of diseased tissue diagnosis is presented. Special emphasis is given to problems which were raised during clinical trials and recent experimental studies. The common origin and possible solution of these problems are shown to be related to, firstly, the identification of the fluorescent chemical species, secondly, the determination of the excitation/collection geometry and its effect to the method and, finally, the further elaboration on the laser-tissue interaction.