I review our recent work on contractions of affine Kac-Moody algebras (KMA) and present new results. We study generalized contractions of KMA with respect to their twisted and untwisted KM subalgebras. As a concrete example, we discuss contraction of D(1)4 and D(3)4, based on Z3-grading. We also describe examples of "level-dependent" contractions, which are based on Z-gradings of KMA. Our work generalizes the Inönü-Wigner contraction of P. Majumdar in several directions. We also give an algorithm for constructing Kac-Moody-like algebras for any Lie algebra g.