Erlotinib (Tarceva) is a small-molecule, orally dosed, anti-cancer drug that inhibits the epidermal growth factor receptor. Randomized, controlled clinical studies have demonstrated that erlotinib significantly improved survival in patients with previously treated non-small-cell lung cancer and, in combination with chemotherapy, in patients with untreated pancreatic cancer. In this article, we describe the clinical evidence and value of erlotinib as a therapy for non-small-cell lung cancer and pancreatic cancer and discuss ongoing clinical studies to optimize its use in various settings and to identify appropriate patient populations.