  The final burst of gravitational radiation emitted by coalescing binary
neutron stars carries direct information about the neutron star fluid, and, in
particular, about the equation of state of nuclear matter at extreme densities.
The final merger may also be accompanied by a detectable electromagnetic
signal, such as a gamma-ray burst. In this paper, we summarize the results of
theoretical work done over the past decade that has led to a detailed
understanding of this hydrodynamic merger process for two neutron stars, and we
discuss the prospects for the detection and physical interpretation of the
gravity wave signals by ground-based interferometers such as LIGO. We also
present results from our latest post-Newtonian SPH calculations of binary
neutron star coalescence, using up to 10^6 SPH particles to compute with higher
spatial resolution than ever before the merger of an initially irrotational
system. We discuss the detectability of our calculated gravity wave signals
based on power spectra.
