An overview is given of the current status of inverse methods and data assimilation for nonlinear ocean models. The inverse theory for time dependent dynamical models is formulated and the most promising solution methods like simulated annealing, the representer method, and sequential methods based on Monte Carlo simulations, are discussed with special focus on applications with nonlinear dynamics. A rather general “model independent” presentation has been used to make the methodology more accessible for different scientific areas dealing with dynamical models and data.