Drug discovery has entered a new century with an unheralded wealth of sophisticated technologies and information generation platforms, including the draft map of the human genome, which theoretically will allow the more rapid development of medicines with improved selectivity and safety profiles. To use the bewildering exponential flow of data related to the molecular targets involved in the cause(s) of various diseases and the increasingly sophisticated computer‐based technologies that define the requirements for chemical diversity and diversity space requires an understanding of basic receptor/enzyme theory. The latter, based on the Law of Mass Action, defines the concepts of agonism, antagonism, and more recently, allosteric modulation. The application of receptor/enzyme theory to the practical aspects of lead compound identification and optimization is based on defining structure‐activity relationships (SARs) for a variety of physiological and pharmacological parameters and involves the evaluation of new chemical entities in
in vitro
and
in vivo
assays that measure efficacy, selectivity, side effect liability and absorption, distribution, metabolism and excretion, and toxicology. Understanding how knowledge of drug targets has evolved; the challenges to validating new targets, especially those evolving from the genome; and assays beyond high‐throughput screening that provide objective SAR information, as well as designing compounds to interact with these targets that have “druggable” characteristics, are the keys to successful, and by definition, financially viable, drug discovery.