We present a short account of recent new developments of density-functional theory (DFT) for accurate and efficient treatments of the electronic structure and quantum dynamics of many-electron systems. The conventional DFT calculations contain spurious self-interaction energy and improper long-range potential, preventing reliable description of the excited and resonance states. We present a new DFT with optimized effective potential (OEP) and self-interaction-correction (SIC) to overcome some of the major difficulties encountered in conventional DFT treatments using explicit energy functionals. The OEP-SIC formalism uses only orbital-independent single-particle local potentials and is self-interaction free, providing a theoretical framework for accurate description of the excited-state properties and quantum dynamics. Several applications of the new procedure are presented, including: (a) the first successful DFT treatment of the atomic autoionizing resonances, (b) a relativistic extension of the OEP-SIC formalism for the calculation of the atomic structure with results in good agreement with the experimental data across the periodic table (Z = 2-106), (c) electronic structure calculation of the ionization properties of molecules, and (d) the delicated "shell-filling" electronic structure in quantum dots. Finally we present also new formulations of time-dependent DFT for nonperturbative treatment of atomic and molecular multiphoton and nonlinear optical processes in intense and superintense laser fields. Both the time-independent Floquet approach and the time-dependent OEP-SIC technique are introduced. Application of the time-dependent DFT/OEP-SIC procedure to the study of multiple high-order harmonic generation processes in intense ultrashort pulsed laser fields is discussed in detail.