We describe a new technique for calculating instanton effects in supersymmetric gauge theories applicable on the Higgs or Coulomb branches. In these situations the instantons are constrained and a potential is generated on the instanton moduli space. Due to existence of a nilpotent fermionic symmetry the resulting integral over the instanton moduli space localizes on the critical points of the potential. Using this technology we calculate the one- and two-instanton contributions to the prepotential of SU(N) gauge theory with N=2 supersymmetry and show how the localization approach yields the prediction extracted from the Seiberg-Witten curve. The technique appears to extend to arbitrary instanton number in a tractable way.
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