Biomarkers have a growing role in clinical trials. With the advent of the targeted therapy era, molecular biomarkers in particular are becoming increasingly important within both clinical research and clinical practice. This article focuses on biomarkers that anticipate the prognosis of individual patients ('prognostic' biomarkers) and on biomarkers that predict how individual patients will respond to specific treatments ('predictive' biomarkers, also called 'effect modifiers'). Specific Phase II and III clinical trial designs are discussed in detail for their ability to validate the biomarker and/or to establish the effect of an experimental therapy in patient populations defined by the presence or absence of the biomarker. Contemporary biomarker-based clinical trials in oncology are used as examples.