In a health care environment dominated by the growth of managed care organizations, generic competition, therapeutic substitution and drug utilization review, drug development is an extremely risky proposition. Consequently, it is imperative to incorporate a mechanistic approach to drug development that combines a thorough understanding of a drug at the molecular/cellular level with a rigorous preclinical, and clinical pharmacology program. This should enable the sponsor to evaluate multiple hypotheses during the early "learning" phases of clinical development (Phases I and IIA) and to eliminate nonpromising candidates early on while drug development costs are low. Clinical research done properly in the early stages of drug development will also set the stage for designing and conducting optimal "confirming" registrational Phase IIB/III studies for promising drug candidates. Pharmacokinetics (PK) and pharmacodynamics (PD) modeling and simulation are crucial components of a mechanistic approach to optimal drug development and their application has significant impact in both early and late development efforts. This communication describes several applications of pharmacokinetics and pharmacodynamics modeling and simulation that were important in guiding, optimizing and ensuring the success of development efforts for drug candidates in the therapeutic areas of cardiology and oncology. These examples are used to illustrate and discuss the use of the current state-of-the-art in pharmacokinetics and pharmacodynamics modeling and simulation at numerous stages in the development cycle and to postulate on future directions in this area.