Targeted drugs hold great promise for the treatment of malignant tumors; however, there are several challenges for efficient evaluation of these drugs in preclinical and clinical studies. These challenges include identifying the 'correct', biologically active concentration and dose schedule, selecting the patients likely to benefit from treatment, monitoring inhibition of the target protein or pathway, and assessing the response of the tumor to therapy. Although anatomic imaging will remain important, molecular imaging provides several new opportunities to make the process of drug development more efficient. Various techniques for molecular imaging that enable noninvasive and quantitative imaging are now available in the preclinical and clinical settings, to aid development and evaluation of new drugs for the treatment of cancer. In this Review, we discuss the integration of molecular imaging into the process of drug development and how molecular imaging can address key questions in the preclinical and clinical evaluation of new targeted drugs. Examples include imaging of the expression and inhibition of drug targets, noninvasive tissue pharmacokinetics, and early assessment of the tumor response.