The translation of emerging genomic knowledge into public health and clinical care is one of the major challenges for the coming decades. At the moment, genome-based prediction of common diseases, such as type 2 diabetes, coronary heart disease and cancer, is still not informative. Our understanding of the genetic basis of multifactorial diseases is improving, but the currently identified susceptibility variants contribute only marginally to the development of disease. At the same time, an increasing number of companies are offering personalized lifestyle and health recommendations on the basis of individual genetic profiles. This discrepancy between the limited predictive value and the commercial availability of genetic profiles highlights the need for a critical appraisal of the usefulness of genome-based applications in clinical and public health care. Anticipating the discovery of a large number of genetic variants in the near future, we need to prepare a framework for the design and analysis of studies aiming to evaluate the clinical validity and utility of genetic tests. In this article, we review recent studies on the predictive value of genetic profiling from a methodological perspective and address issues around the choice of the study population, the construction of genetic profiles, the measurement of the predictive value, calibration and validation of prediction models, and assessment of clinical utility. Careful consideration of these issues will contribute to the knowledge base that is needed to identify useful genome-based applications for implementation in clinical and public health practice.