Dynamic regulation of specific molecular processes and cellular phenotypes in live cell systems reveal unique insights into cell fate and drug pharmacology that are not gained from traditional fixed endpoint assays. Recent advances in microscopic imaging platform technology combined with the development of novel optical biosensors and sophisticated image analysis solutions have increased the scope of live cell imaging applications in drug discovery. We highlight recent literature examples where live cell imaging has uncovered novel insight into biological mechanism or drug mode-of-action. We survey distinct types of optical biosensors and associated analytical methods for monitoring molecular dynamics, in vitro and in vivo. We describe the recent expansion of live cell imaging into automated target validation and drug screening activities through the development of dedicated brightfield and fluorescence kinetic imaging platforms. We provide specific examples of how temporal profiling of phenotypic response signatures using such kinetic imaging platforms can increase the value of in vitro high-content screening. Finally, we offer a prospective view of how further application and development of live cell imaging technology and reagents can accelerate preclinical lead optimization cycles and enhance the in vitro to in vivo translation of drug candidates.