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First-principles calculations have evolved from mere aids in explaining and supporting experiments to powerful tools for predicting new materials and their properties. In the first part of this review we describe the state-of-the-art computational methodology for calculating the structure and energetics of point defects and impurities in semiconductors. We will pay particular attention to computational aspects which are unique to defects or impurities, such as how to deal with charge states and how to describe and interpret transition levels. In the second part of the review we will illustrate these capabilities with examples for defects and impurities in nitride semiconductors. Point defects have traditionally been considered to play a major role in wide-band-gap semiconductors, and first-principles calculations have been particularly helpful in elucidating the issues. Specifically, calculations have shown that the unintentional n-type conductivity that has often been observed in as-grown GaN cannot be attributed to nitrogen vacancies, but is due to unintentional incorporation of donor impurities. Native point defects may play a role in compensation and in phenomena such as the yellow luminescence, which can be attributed to gallium vacancies. In the section on impurities, specific attention will be focused on dopants. Oxygen, which is commonly present as a contaminant, is a shallow donor in GaN but becomes a deep level in AlGaN due to a DX transition. Magnesium is almost universally used as the p-type dopant, but hole concentrations are still limited. Reasons for this behavior are discussed, and alternative acceptors are examined. Hydrogen plays an important role in p-type GaN, and the mechanisms that underlie its behavior are explained. Incorporating hydrogen along with acceptors is an example of codoping; a critical discussion of codoping is presented. Most of the information available to date for defects and impurities in nitrides has been generated for GaN, but we will also discuss AlN and InN where appropriate. We conclude by summarizing the main points and looking towards the future.