Pharmacokinetic-pharmacodynamic (PK-PD) modeling is an integral part of the preclinical and clinical development of protein drugs. Bioanalytical data from appropriately selected and well-characterized PK and PD biomarker assays can be incorporated into mechanistic PK-PD models and allow a quantitative relationship between protein drug exposure, target modulation, and biochemical, physiological and pathophysiological effects to be established. The selection of PD biomarkers that assess target engagement and modulation in the extracellular milieu and downstream cellular effects can provide proof-of-mechanism and define the magnitude and duration of target modulation following drug administration. The PK-PD data can provide an important link between magnitude of target modulation and clinical efficacy and safety outcomes, and guide the selection of doses and dosing schedules for clinical trials. In this article, approaches to the selection and development of fit-for-purpose, PK and PD assays for protein drugs are reviewed, and the applications of the assay results in PK-PD models are discussed.