AstroGrid is the UK's contribution to the world-wide drive towards a Virtual Observatory (VO). I describe the project, its relation to other VO projects and other e-Science projects, and its current status. I then examine the concepts and science drivers behind the Virtual Observatory and the Grid, and the technical challenges which we face. The conception of the VO we arrive at is not one of a software monolith, but rather one of a framework which enables
data centres to provide competing and co-operating data services, and which enables software providers to offer a variety of compatible analysis and visualisation tools and user interfaces. The first priority of the VO projects worldwide is to provide the infrastructure which will enable such creative diversity. AstroGrid is however also a consortium of data centres, which will pool resources within this framework, and we expect to develop an early working implemementation of immediate use to astronomers.