As the amount of genome information increases rapidly, there is a correspondingly greater need for methods that provide accurate and automated annotation of gene function. For example, many high-throughput technologies–e.g., next-generation sequencing–are being used today to generate lists of genes associated with specific conditions. However, their functional interpretation remains a challenge and many tools exist trying to characterize the function of gene-lists. Such systems rely typically in enrichment analysis and aim to give a quick insight into the underlying biology by presenting it in a form of a summary-report. While the load of annotation may be alleviated by such computational approaches, the main challenge in modern annotation remains to develop a systems form of analysis in which a pipeline can effectively analyze gene-lists quickly and identify aggregated annotations through computerized resources. In this article we survey some of the many such tools and methods that have been developed to automatically interpret the biological functions underlying gene-lists. We overview current functional annotation aspects from the perspective of their epistemology (i.e., the underlying theories used to organize information about gene function into a body of verified and documented knowledge) and find that most of the currently used functional annotation methods fall broadly into one of two categories: they are based either on ‘known’ formally-structured ontology annotations created by ‘experts’ (e.g., the GO terms used to describe the function of Entrez Gene entries), or–perhaps more adventurously–on annotations inferred from literature (e.g., many text-mining methods use computer-aided reasoning to acquire knowledge represented in natural languages). Overall however, deriving detailed and accurate insight from such gene lists remains a challenging task, and improved methods are called for. In particular, future methods need to (1) provide more holistic insight into the underlying molecular systems; (2) provide better follow-up experimental testing and treatment options, and (3) better manage gene lists derived from organisms that are not well-studied. We discuss some promising approaches that may help achieve these advances, especially the use of extended dictionaries of biomedical concepts and molecular mechanisms, as well as greater use of annotation benchmarks.