The paper describes a technique for manipulating quantum information stored in collective states of mesoscopic atomic ensembles using optical excitation into states with strong dipole-dipole interactions. This "dipole blockade" phenomenon inhibits transitions into all but singly excited collective states, enabling controlled generation of collective atomic spin states and non-classical photonic states. The technique can be used for scalable quantum logic gates and has potential applications in sub-shot noise spectroscopy, secure cryptography, and scalable quantum logic devices. The authors demonstrate that this approach does not require strongly coupling micro-cavities or single-particle control, making it feasible for a variety of interacting many-body systems. The paper also discusses the robustness of collective spin states against decoherence and the practical considerations for implementing the technique, including the use of magnetic or optical traps and low-Q cavities.The paper describes a technique for manipulating quantum information stored in collective states of mesoscopic atomic ensembles using optical excitation into states with strong dipole-dipole interactions. This "dipole blockade" phenomenon inhibits transitions into all but singly excited collective states, enabling controlled generation of collective atomic spin states and non-classical photonic states. The technique can be used for scalable quantum logic gates and has potential applications in sub-shot noise spectroscopy, secure cryptography, and scalable quantum logic devices. The authors demonstrate that this approach does not require strongly coupling micro-cavities or single-particle control, making it feasible for a variety of interacting many-body systems. The paper also discusses the robustness of collective spin states against decoherence and the practical considerations for implementing the technique, including the use of magnetic or optical traps and low-Q cavities.