  In this paper we review the latest achievements of density functional theory
in understanding the physics of diluted magnetic semiconductors. We focus on
transition metal doped III-V semiconductors, which show spontaneous
ferromagnetic order at relatively high temperature and good structural
compatibility with existing III-V devices. We show that density functional
theory is a very powerful tool for i) studying the effects of local doping
defects and disorder on the magnetic properties of these materials, ii)
predicting properties of new materials and iii) providing parameters, often not
accessible from experiments, for use in model Hamiltonian calculations. Such
studies are facilitated by recent advances in numerical implementations of
density functional theory, which make the study of systems with a very large
number of atoms possible.
