Communication between cells invariably involves interactions of a signalling molecule with a receptor at the surface of the cell. Typically, the receptor is imbedded in the membrane and it is hypothesized that the binding of the signalling molecule causes a change in the state of aggregation of the receptor which, in turn, initiates a biochemical signal within the cell. Subsequently, many of the occupied receptors bind to membrane-associated structures, called coated pits, which invaginate and pinch off to form coated vesicles, thereby removing the receptors from the cell surface. The state of aggregation of membrane receptors is obviously in constant flux. Any useful approach to measuring the state of aggregation must, therefore, allow for dynamic measurements in living cells. It is possible to use fluorescently labelled signalling molecules or antibodies directed at the receptor of interest to visualize the receptor on the cell surface with a fluorescence microscope. By employing a laser confocal microscope, high resolution images can be produced in which the fluorescence intensity is quantitatively imaged as a function of position across the surface of the cell. Calculations of autocorrelation functions of these images provide direct and accurate measures of the density of fluorescent particles on the surface. Combined with the average intensity in the image, which reflects the total average number of molecules, it is possible to estimate the degree of aggregation of the receptor molecules. We refer to this analysis as image correlation spectroscopy (ICS). We show how ICS can be used to measure the density of several receptors on a variety of cells and how it can be used to measure the density of coated pits and the number of molecules per coated pit. We also show how the technique can be used to monitor fusion of virus particles to cell membranes. Further, we illustrate that, by calculating cross-correlation functions between pairs of images, we can extend the analysis to measurements of the distributions as a function of time, on the second timescale, as well as to measurements of the movement of the receptor aggregates on the surface. Finally, we illustrate that, by this approach, we can measure the extent of interaction between two different receptors as a function of time. This represents the most quantitative measurement of the extent of co-localization of receptors available and is independent of the spatial resolution of the confocal microscope. The theory of ICS and image cross-correlation spectroscopy (ICCS), focussing on the interpretation of the data in terms of the biological phenomenon being probed, is discussed.