Albanian is a language of the extensive Indo-European family and is thus related to a certain degree to almost all other languages of Europe. At the same time, Albanian shows no particularly close historical affinity to any other language or language group within the Indo-European family, i.e. it forms a language group of its own. Despite Albania’s geographical proximity to Greece, linguistic contacts with ancient Greek seem to have been sporadic. Roman trading settlements on the Illyrian coast and Albania’s absorption into the Roman Empire, however, left noticeable traces in the language. Borrowings from Latin, which took place over a period of several centuries, were so massive as to threaten the very structure of the language. Cultural contacts with the Slavs (Bulgarians and Serbs), Turks and Italians have also left substantial strata of vocabulary in Albanian. Not only in its vocabulary, but also in its morphology and syntax, Albanian shows many traits in common with other Balkan languages, due both to extinct substrata languages (Illyrian, Thracian, Dacian) and to centuries of parallel development.

The Albanian language is divided into two basic dialect groups: Gheg in the north of the country and Tosk in the south. The Shkumbin River in central Albania, flowing past Elbasan into the Adriatic, forms the approximate boundary between the two dialect regions. Here, in a zone ten to twenty kilometers wide, intermediate dialects are also found.

The Tosk dialect group is in general more homogenous, though it can be subdivided into a northern (from Fier to Vlora on the coast and all of inland southern Albania north of the Vjosa River), a Labërian or Lab (south of the Vjosa to Saranda), and a Çamërian or Çam (the southern tip of Albania and into Greece) dialect.

The modern literary language (gjuha letrare), agreed upon at the Orthography Congress of 20 to 25 November 1972, is a combination of the two dialect groups, though based about eighty percent on Tosk. It is now a widely accepted standard both in Albania and elsewhere, though there have been increasing tendencies in recent years to revive literary Gheg.

Sources:
Wikipedia
http://www.albanianlanguage.net/
http://www.lmp.ucla.edu/Profile.aspx?LangID=36&menu=004