Rational and efficient development of new molecular cancer therapeutics requires discovery, validation, and implementation of informative biomarkers. Measurement of molecular target status, pharmacokinetic (PK) parameters of drug exposure, and pharmacodynamic (PD) endpoints of drug effects on target, pathway, and downstream biological processes are extremely important. These can be linked to therapeutic effects in what we term a "pharmacological audit trail." Using biomarkers in preclinical drug discovery and development facilitates optimization of PK, PD, and therapeutic properties so that the best agent is selected for clinical evaluation. Applying biomarkers in early clinical trials helps identify the most appropriate patients; provides proof of concept for target modulation; helps test the underlying hypothesis; informs the rational selection of dose and schedule; aids decision making, including key go/no go questions; and may explain or predict clinical outcomes. Despite many successes such as trastuzumab and imatinib, exemplifying the value of targeting specific cancer defects, only 5% of oncology drugs that enter the clinic make it to marketing approval. Use of biomarkers should reduce this high level of attrition and bring forward key decisions (e.g., "fail fast"), thereby reducing the spiraling costs of drug development and increasing the likelihood of getting innovative and active drugs to cancer patients. In this chapter, we focus primarily on PD endpoints that demonstrate target modulation, including both invasive molecular assays and functional imaging technology. We also discuss related clinical trial design issues. Implementation of biomarkers in trials remains disappointingly low and we emphasize the need for greater cooperation between various stakeholders to improve this.