Key issues in early clinical trials of targeted agents include the determination of target inhibition, rational patient selection based on pre-treatment tumour characteristics, and assessment of tumour response in the absence of actual shrinkage. There is accumulating evidence that functional imaging using advanced techniques such as dynamic contrast enhanced (DCE)-magnetic resonance imaging (MRI), DCE-computerised tomography (CT) and DCE-ultrasound, diffusion weighted-MRI, magnetic resonance spectroscopy and positron emission tomography-CT using various labelled radioactive tracers has the potential to address all three. This article reviews this evidence with examples from trials using targeted agents with established clinical efficacy and summarises the clinical utility of the various techniques. We therefore recommend that input from specialist radiologists is sought at the early stages of trial design, in order to ensure that functional imaging is incorporated appropriately for the agent under study. There is an urgent need to strengthen the evidence base for these techniques as they evolve, and to ensure standardisation of the methodology.