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Genetic diversity in the form of single nucleotide DNA polymorphisms (SNPs) contributes to variable disease susceptibility and drug response. The candidate gene approach has been widely used to identify the genetic basis for pharmacogenetic traits and becomes increasingly more powerful with the recent advances in genomic technologies. High-throughput sequencing and SNP genotyping technologies allow the study of thousands of candidate genes and the identification of those involved in drug efficacy and toxicity. Expression-based genomic technologies such as DNA microarrays and proteomics also facilitate the understanding of important biological and pharmacological pathways, thus identifying more candidate genes for SNP studies. Candidate gene-based pharmacogenetic studies will lead to improved drug development, improved clinical trial design and therapeutics tailored to individual genotypes.