There is enormous potential for the discovery of innovative cancer drugs with improved efficacy and selectivity for the third millennium. In this review we show how novel mechanism-based agents are being discovered by focusing on the molecular targets and pathways that are causally involved in cancer formation, maintenance and progression. We also show how new technologies, from genomics through high throughput bioscience, combinatorial chemistry, rational drug design and molecular pharmacodynamic and imaging techniques, are accelerating the pace of cancer drug discovery. The process of contemporary small molecule drug discovery is described and progress and current issues are reviewed. New and potential targets and pathways for therapeutic intervention are illustrated. The first examples of a new generation of molecular therapeutics are now entering hypothesis-testing clinical trials and showing activity. The early years of the new millennium will see a range of exciting new agents moving from bench to bedside and beginning to impact on the management and cure of cancer.