The ability to accurately predict the interaction of a ligand with its receptor is a key limitation in computer-aided drug design approaches such as virtual screening and de novo design. In this article, we examine current strategies for a physics-based approach to scoring of protein-ligand affinity, as well as outlining recent developments in force fields and quantum chemical techniques. We also consider advances in the development and application of simulation-based free energy methods to study protein-ligand interactions. Fuelled by recent advances in computational algorithms and hardware, there is the opportunity for increased integration of physics-based scoring approaches at earlier stages in computationally guided drug discovery. Specifically, we envisage increased use of implicit solvent models and simulation-based scoring methods as tools for computing the affinities of large virtual ligand libraries. Approaches based on end point simulations and reference potentials allow the application of more advanced potential energy functions to prediction of protein-ligand binding affinities. Comprehensive evaluation of polarizable force fields and quantum mechanical (QM)/molecular mechanical and QM methods in scoring of protein-ligand interactions is required, particularly in their ability to address challenging targets such as metalloproteins and other proteins that make highly polar interactions. Finally, we anticipate increasingly quantitative free energy perturbation and thermodynamic integration methods that are practical for optimization of hits obtained from screened ligand libraries.