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Biomarker identification has been a critical component in drug discovery and development. Biomarkers have been utilized in several areas such as disease diagnosis, pharmacokinetics-pharmacodynamics (PK-PD) modeling, evaluation of efficacy and toxicity to guide both pre-clinical compound selection and clinical study of candidate compounds. Recent advances in genomics and bioinformatics have created a new paradigm in the development of robust gene expression signature biomarkers, particularly for predicting toxicity and cancer drug responses. In this article, we present an overview of current progress in this arena including methodology development and applications in the drug discovery process.