Drug discovery and development is generally done in the commercial rather than the academic realm. Drug discovery involves target discovery and validation, lead identification by high-throughput screening, and lead optimization by medicinal chemistry. Follow-up preclinical evaluation includes analysis in animal models of compound efficacy and pharmacology (ADME: administration, distribution, metabolism, elimination) and studies of toxicology, specificity, and drug interactions. Notwithstanding the high-cost, labor-intensive, and non-hypothesis-driven aspects of drug discovery, the academic setting has a unique and expanding niche in this important area of investigation. For example, academic drug discovery can focus on targets of limited commercial value, such as third-world and rare diseases, and on the development of research reagents such as high-affinity inhibitors for pharmacological “gene knockout” in animal models (“chemical genetics”). This review describes the practical aspects of the preclinical drug discovery process for academic investigators. The discovery of small molecule inhibitors and activators of the cystic fibrosis transmembrane conductance regulator is presented as an example of an academic drug discovery program that has yielded new compounds for physiology research and clinical development.