Abstract The derivation of coupled-cluster response theory for explicitly correlated wavefunctions with terms linear in the interelectronic distance r 12 (CC-R12) or a function f 12 thereof (CC-F12) is reviewed and an implementation at the CCSD(R12) and CCSD(F12) for excitation energies and the linear, quadratic and cubic reponse functions is reported for ansätze 1 and 2. We discuss the results of first applications for vertical excitation energies, excited state equilibrium structures and vibrational frequencies, polarizabilities and first and second hyperpolarizabilities with focus on present limitations and future prospects of the approach. We show in particular that the standard choice of the geminal functions and wavefunction expansion can in certain cases lead to a bias towards the unperturbed ground state and how this can be avoided by extending the geminal space. If taken care of this, in particular CCSD(F12)/ansatz 2 shows for the potential energy curves of excited states and for optical properties a similar enhanced basis set convergence of the correlation contribution due to connected double excitations as for ground state energies. For diffuse excited states and hyperpolarizbilities the correlation contribution converges with CCSD(F12)/ansatz 2 often faster than orbital relaxation contributions. The convergence of the latter can be improved by allowing single excitations into a space spanned by a complementary auxiliary basis set.