Drug-induced phospholipidosis (PL) is an excessive accumulation of phospholipids and drug in lysosomes. Phospholipidosis signals a change in cell membrane integrity and accumulation of intracellular drug or metabolite in tissues. The sensitivity and susceptibility of preclinical models to detect PL vary with therapeutic agents, and PL is expected to be reversible after discontinuation of drug treatment. The prevailing scientific opinion is that PL by itself is not adverse; however, some regulatory authorities consider PL to be adverse because a small number of chemicals are able to cause PL and concurrent organ toxicity. Until a greater understanding of PL emerges, a well-thought-out risk management strategy for PL will increase confidence in safety and improve selection and development of new drugs. This paper provides a tiered approach to risk management of drug-induced PL. It begins with use of in silico and in vitro tools to design and select compounds with reduced potential to produce PL. Early in vivo studies in two species are used to better characterize potential for toxicity and PL. Finally, routine risk management tools (i.e., translational biomarkers, assessment of reversibility) are used to support confidence in safety of compounds that induce PL in animals.