The heating of the solar corona has been a fundamental astrophysical issue for over sixty years. Over the last decade in particular, space-based solar observatories (Yohkoh, SOHO and TRACE) have revealed the complex and often subtle magnetic-field and plasma interactions throughout the solar atmosphere in unprecedented detail. It is now established that any energy release mechanism is magnetic in origin - the challenge posed is to determine what specific heat input is dominating in a given coronal feature throughout the solar cycle. This review outlines a range of possible magnetohydrodynamic (MHD) coronal heating theories, including MHD wave dissipation and MHD reconnection as well as the accumulating observational evidence for quasi-periodic oscillations and small-scale energy bursts occurring in the corona. Also, we describe current attempts to interpret plasma temperature, density and velocity diagnostics in the light of specific localised energy release. The progress in these investigations expected from future solar missions (Solar-B, STEREO, SDO and Solar Orbiter) is also assessed.