In an increasing number of cases, a deeper understanding of the biochemical basis for idiosyncratic adverse drug reactions (IADRs) has aided to replace a vague perception of a chemical class effect with a sharper picture of individual molecular peculiarity. Considering that IADRs are too complex to duplicate in a test tube, and their idiosyncratic nature precludes prospective clinical studies, it is currently impossible to predict which new drugs will be associated with a significant incidence of toxicity. Because it is now widely appreciated that reactive metabolites, as opposed to the parent molecules from which they are derived, are responsible for the pathogenesis of some IADRs, the propensity of drug candidates to form reactive metabolites is generally considered a liability. Procedures have been implemented to monitor reactive-metabolite formation in discovery with the ultimate goal of eliminating or minimizing the liability via rational structural modification of the problematic chemical series. While such mechanistic studies have provided retrospective insight into the metabolic pathways which lead to reactive metabolite formation with toxic compounds, their ability to accurately predict the IADR potential of new drug candidates has been challenged. There are several instances of drugs that form reactive metabolites, but only a fraction thereof cause toxicity. This review article will outline current approaches to evaluate bioactivation potential of new compounds with particular emphasis on the advantages and limitation of these assays. Plausible reason(s) for the excellent safety record of certain drugs susceptible to bioactivation will also be explored and should provide valuable guidance in the use of reactive-metabolite assessments when nominating drug candidates for development.