Libyan-U.S. rapprochement has unfolded gradually since 2003, when the Libyan gov¿t. accepted responsibility for the actions of its personnel in regard to the 1988 bombing of Pan Am Flight 103 and announced its decision to eliminate its weapons of mass destruction and long-range missile programs. Full diplomatic relations were restored on May 31, 2006 when the U.S. upgraded its Liaison Office in Tripoli to an Embassy. This report provides background information on Libya and U.S.-Libyan relations; profiles Libyan leader Muammar al Qadhafi; discusses Libya¿s political and economic reform efforts; and reviews current issues of potential congressional interest. Illustrations.