Population pharmacokinetics or pharmacodynamics is the study of the variability in drug concentration or pharmacological effect between individuals when standard dosage regimens are administered. We provide an overview of pharmacokinetic models, pharmacodynamic models, population models and residual error models. We outline how population modelling approaches seek to explain interpatient variability with covariate analysis, and, in some approaches, to characterize the unexplained interindividual variability. The interpretation of the results of population modelling approaches is facilitated by shifting the emphasis from the perspective of the modeller to the perspective of the clinician. Both the explained and unexplained interpatient variability should be presented in terms of their impact on the dose-response relationship. Clinically relevant questions relating to the explained and unexplained variability in the population can be posed to the model, and confidence intervals can be obtained for the fraction of the population that is estimated to fall within a specific therapeutic range given a certain dosing regimen. Such forecasting can be used to develop optimal initial dosing guidelines. The development of population models (with random effects) permits the application of Bayes's formula to obtain improved estimates of an individual's pharmacokinetic and pharmacodynamic parameters in the light of observed responses. An important challenge to clinical pharmacology is to identify the drugs that might benefit from such adaptive-control-with-feedback dosing strategies. Drugs used for life threatening diseases with a proven pharmacokinetic-pharmacodynamic relationship, a small therapeutic range, large interindividual variability, small interoccasion variability and severe adverse effects are likely to be good candidates. Rapidly evolving changes in health care economics and consumer expectations make it unlikely that traditional drug development approaches will succeed in the future. A shift away from the narrow focus on rejecting the null hypothesis towards a broader focus on seeking to understand the factors that influence the dose-response relationship--together with the development of the next generation of software based on population models--should permit a more efficient and rational drug development programme.