Recently, device-to-device (D2D) communication has emerged to offer opportunities for high-rate wireless transmission locally in cellular networks. Such proximity-based communication technology, with advantages in high data transmission rate, spectrum efficiency, and energy efficiency over traditional technologies, has attracted tremendous research interest. Since D2D communication highly relies on user participation, providing incentives is critical to enable D2D communication with desired quality of service (QoS). Existing popular approaches for designing incentive mechanisms (e.g., auction) may cause large overhead of both communication and computation, and thus is inefficient for D2D communication. In this article, we introduce contract theory to provide effective and distinctive incentive mechanisms, which can also reduce computation and communication costs and thus has great potential for practical implementation. To evaluate the performance of the proposed contract-based approach, we also provide a case study that shows the advantages of contract theory in designing efficient incentives and handling uncertainty.