Mouse models of cancer have consistently been used to qualify new anti-cancer drugs for development of human clinical trials. The most used models are xenografts of human tumors grown subcutaneously in immunodeficient mice such as athymic (nude) or severe combined immune deficient (SCID) mice. However, the number of anti-cancer agents that fail in the clinic far outweighs those considered effective, suggesting that the selection procedure for progression of molecules into the clinic requires improvement. This has provoked considerable skepticism about the value of using such preclinical models. As a result, a shift has occurred towards developing and using spontaneous mouse tumor arising in transgenic and/or knockout mice engineered to recapitulate various genetic alterations thought to be causative of specific types of human cancers. Alternatively, the option has been to improve human tumor xenograft models by using orthotopic transplantation and, therefore, promotion of metastatic spread of the resultant 'primary' tumors. Here we review the value and the limitations of xenograft models and their role in developing new anti-cancer treatments.