ABSTRACTDose‐finding studies play a crucial role in drug development by identifying the optimal dose(s) for later studies while considering tolerability. This not only saves time and effort in proceeding with Phase III trials but also improves efficacy. In an era of precision medicine, it is not ideal to assume patient homogeneity in dose‐finding studies as patients may respond differently to the drug. To address this, we propose a personalized dose‐finding algorithm that assigns patients to individualized optimal biological doses. Our design follows a two‐stage approach. Initially, patients are enrolled under broad eligibility criteria. Based on the Stage 1 data, we fit a regression model of toxicity and efficacy outcomes on dose and biomarkers to characterize treatment‐sensitive patients. In the second stage, we restrict the trial population to sensitive patients, apply a personalized dose allocation algorithm, and choose the recommended dose at the end of the trial. Simulation study shows that the proposed design reliably enriches the trial population, minimizes the number of failures, and yields superior operating characteristics compared to several existing dose‐finding designs in terms of both the percentage of correct selection and the number of patients treated at target dose(s).