Progress in oncology drug development has been hampered by a lack of preclinical models that reliably predict clinical activity of novel compounds in cancer patients. In an effort to address these shortcomings, there has been a recent increase in the use of patient-derived tumour xenografts (PDTX) engrafted into immune-compromised rodents such as athymic nude or NOD/SCID mice for preclinical modelling. Numerous tumour-specific PDTX models have been established and, importantly, they are biologically stable when passaged in mice in terms of global gene-expression patterns, mutational status, metastatic potential, drug responsiveness and tumour architecture. These characteristics might provide significant improvements over standard cell-line xenograft models. This Review will discuss specific PDTX disease examples illustrating an overview of the opportunities and limitations of these models in cancer drug development, and describe concepts regarding predictive biomarker development and future applications.