  This paper reviews the recent results from a comprehensive investigation of
the most luminous mergers in the local universe, the ultraluminous infrared
galaxies (ULIRGs) and the quasars. First, the frequency of occurrence and
importance of black hole driven nuclear activity in ULIRGs are discussed using
the latest sets of optical, near-infrared, mid-infrared, and X-ray spectra on
these objects. Obvious trends with luminosity, infrared color, and morphology
are pointed out. Next, the host galaxy properties of ULIRGs are described in
detail and then compared with local quasar hosts and inactive spheroids. By and
large, these data are consistent with the scenario where ULIRGs are
intermediate-mass elliptical galaxies in formation and in the process of
becoming moderate-luminosity optical quasars. The powerful galactic winds
detected in many ULIRGs may help shed any excess gas during this
transformation. However, this evolutionary scenario does not seem to apply to
all ULIRGs and quasars: Ultraluminous infrared mergers do not always result in
a quasar, and low-luminosity quasars near the boundary with Seyferts do not all
show signs of a recent major merger.
