The majority of cancer drugs entering clinical trials fail to reach the market due to poor efficacy. Preclinicalefficacy has been traditionally tested using subcutaneous xenograft models that are cheap, fast and easy to perform. However, these models lack the correct tumor microenvironment, leading to poor clinical predictivity. Selecting compounds for clinical trials based on efficacy results obtained from subcutaneous xenograft models may therefore be one important reason for the high failure rates. In this review we concentrate in describing the role and importance of the tumor microenvironment in progression of breast and prostate cancer, and describe some breast and prostate cancer cell lines that are widely used in preclinical studies. We go through different preclinical efficacy models that incorporate the tissue microenvironment and should therefore be clinically more predictive than subcutaneous xenografts. These include three-dimensional cell culture models, orthotopic and metastasis models, humanized and transgenic mouse models, and patient-derived xenografts. Different endpoint measurements and applicable imaging techniques are also discussed. We conclude that models that incorporate the tissue microenvironment should be increasingly used in preclinical efficacy studies to reduce the current high attrition rates of cancer drugs in clinical trials. The majority of cancer drugs entering clinical trials fail to reach the market due to poor efficacy. Preclinicalefficacy has been traditionally tested using subcutaneous xenograft models that are cheap, fast and easy to perform. However, these models lack the correct tumor microenvironment, leading to poor. clinical predictivity. Selecting compounds for clinical trials based on efficacy results obtained from subcutaneous xenograft models may therefore be one important reason for the high failure rates. cancer, and describe some breast and prostate cancer cell lines that are widely used in preclinical studies. We include through different preclinical efficacy models that incorporate the tissue microenvironment and should therefore be clinically more predictive than subcutaneous xenografts. These include three-dimensional cell culture models orthotopic and me tastasis models, humanized and transgenic mouse models, and patient-derived xenografts. Different endpoint measurements and applicable imaging techniques are also discussed. We conclude that models that incorporate the tissue microenvironment should be increasing used in preclinical efficacy studies to reduce the current high attrition rates of cancer drugs in clinical trials.