Chlorine is one of the most common atoms present in small-molecule drugs beyond carbon, hydrogen, nitrogen, and oxygen. There are currently more than 250 FDA-approved chlorine-containing drugs, yet the beneficial effect of the chloro substituent has not yet been reviewed. The seemingly simple substitution of a hydrogen atom (R = H) with a chlorine atom (R = Cl) can result in remarkable improvements in potency of up to 100,000-fold and can lead to profound effects on pharmacokinetic parameters including clearance, half-life, and drug exposure in vivo. Following the literature terminology of the "magic methyl effect" in drugs, the term "magic chloro effect" has been coined herein. Although reports of 500-fold or 1000-fold potency improvements are often serendipitous discoveries that can be considered "magical" rather than planned, hypotheses made to explain the magic chloro effect can lead to lessons that accelerate the cycle of drug discovery.