We present new methods for time-dependent quantum mechanical simulations of large polyatomic systems and their applications to photochemical processes in clusters. Two related approaches are discussed: The Classical Separable Potential (CSP) approach, and its extension towards Configuration Interaction (CI-CSP). The former scheme assumes separability of the vibrational modes of the system, and describes each mode as moving in a mean field due to the other modes. The basic idea, which allows for quantum simulations of hitherto unaccesibly large systems, is that the effective single-mode potentials are obtained from a classical MD simulation that precedes the quantum calculation. The second approach represents an improvement that corrects for correlations between different modes, resulting in a scheme of good accuracy. Applications of the methods are presented for dynamics following photodetachment in a small I-(Ar)2 cluster (where comparison with numerically exact calculation is possible) and for photoexcitation dynamics and spectroscopy of atomic and molecular impurities in large clusters, such as I2(Ar)17 and I2(Ar)47. Future directions of method development are suggested in the light of the algorithmic aspects and the applications.