We review the current status of studies of the coalescence of binary neutron star systems. We begin with a discussion of the formation channels of merging binaries and we discuss the most recent theoretical predictions for merger rates. Next, we turn to the quasi-equilibrium formalisms that are used to study binaries prior to the merger phase and to generate initial data for fully dynamical simulations. The quasi-equilibrium approximation has played a key role in developing our understanding of the physics of binary coalescence and, in particular, of the orbital instability processes that can drive binaries to merger at the end of their lifetimes. We then turn to the numerical techniques used in dynamical simulations, including relativistic formalisms, (magneto-)hydrodynamics, gravitational-wave extraction techniques, and nuclear microphysics treatments. This is followed by a summary of the simulations performed across the field to date, including the most recent results from both fully relativistic and microphysically detailed simulations. Finally, we discuss the likely directions for the field as we transition from the first to the second generation of gravitational-wave interferometers and while supercomputers reach the petascale frontier.