The authors review the use of biomarkers in the development of novel psychotropic agents. They briefly review clinical drug development, emphasizing the importance of incorporating biomarkers. For the development of psychotropic agents, biomarkers are particularly useful for assessing central nervous system exposure and effects and for serving as surrogate measures for safety and efficacy. Collectively, biomarkers allow for more accurate estimation of doses for clinical trials as drug development progresses. For drugs that target the pathophysiology of Alzheimer disease, several promising biomarkers are becoming available that may allow improved signal detection in clinical trials. Procedures for developing new drugs are evolving rapidly. Technical advances in the field are making it possible to shift from empirically-based methods to mechanistically-driven schemes. Biomarkers enhance the quality and safety of clinical drug development and reduce its cost and duration.