AbstractStar formation started as a cosmic process soon after the big bang and still continues in the Milky Way, although at a decreasing rate. The formation of dense interstellar clouds, their fragmentation and eventual collapse lead to the birth of stars. The nearby clouds provide the highest resolution for the study of this process. The progress is closely following the improvement of the infrared and radio-wavelength facilities that enables us to follow even the earliest stages of the star-formation process inside molecular clouds. On the other hand, modern numerical simulations can take into account most of the relevant physics and often provide a more direct access into the general principles of star formation. The comparison of observations and simulations is therefore essential. In this paper, will discuss star formation in the solar neighbourhood, concentrating on the prestellar phases leading up to the formation of protostars.