The process of searching for new cancer drugs has evolved from rational empiricism using high volume murine screens towards more targeted systems designed to discover agents which are specifically active against the common solid tumors of adulthood. Irrespective of the method of discovery, animal models are necessary in cancer drug development to answer fundamental questions of drug pharmacology and end organ toxicity. This knowledge is fundamental to the design of Phase I clinical trials. Increasingly, animal models are being utilized in the earliest stages of cancer drug discovery, as well as finding new uses guiding dose escalation in man. In addition, transgenic and SCID model systems have special applicability to the preclinical and clinical development of biological agents. This article reviews the emerging roles of animal models in cancer drug discovery and development.