Many decisions in drug development and medical practice are based on measuring blood concentrations of endogenous and exogenous molecules. Yet most biochemical and pharmacological events take place in the tissues. Also, most drugs with few notable exceptions exert their effects not within the bloodstream, but in defined target tissues into which drugs have to distribute from the central compartment. Assessing tissue drug chemistry has, thus, for long been viewed as a more rational way to provide clinically meaningful data rather than gaining information from blood samples. More specifically, it is often the extracellular (interstitial) tissue space that is most closely related to the site of action (biophase) of the drug. Currently microdialysis (microD) is the only tool available that explicitly provides data on the extracellular space. Although microD as a preclinical and clinical tool has been available for two decades, there is still uncertainty about the use of microD in drug research and development, both from a methodological and a regulatory point of view. In an attempt to reduce this uncertainty and to provide an overview of the principles and applications of microD in preclinical and clinical settings, an AAPS-FDA workshop took place in November 2005 in Nashville, TN, USA. Stakeholders from academia, industry and regulatory agencies presented their views on microD as a tool in drug research and development.