Coherent preparation by laser light of quantum states of atoms and molecules can lead to quantum interference in the amplitudes of optical transitions. In this way the optical properties of a medium can be dramatically modified, leading to electromagnetically induced transparency and related effects, which have placed gas-phase systems at the center of recent advances in the development of media with radically new optical properties. This article reviews these advances and the new possibilities they offer for nonlinear optics and quantum information science. As a basis for the theory of electromagnetically induced transparency the authors consider the atomic dynamics and the optical response of the medium to a continuous-wave laser. They then discuss pulse propagation and the adiabatic evolution of field-coupled states and show how coherently prepared media can be used to improve frequency conversion in nonlinear optical mixing experiments. The extension of these concepts to very weak optical fields in the few-photon limit is then examined. The review concludes with a discussion of future prospects and potential new applications.