The purpose of this study was to address the question of whether the use of nonlinear mixed-effect models has an impact on the detection and characterization of nonlinear processes (pharmacokinetic and pharmacodynamic) in rich data obtained from a few subjects. Simulations were used to assess the difference between applying population analysis, ie, nonlinear mixed-effects models as implemented in NONMEM, and the standard 2-stage (STS) method as the data analysis method for detection and characterization of nonlinearities. Three situations were considered, 2 pharmacokinetic and 1 pharmacodynamic. Both the first-order (FO) and FO conditional estimation (FOCE) algorithms were used for the population analyses. Within each situation, rich data were simulated for 8 subjects at multiple dose levels. The true nonlinear model and a simpler linear model were fit to each data set using each of the STS, FO, and FOCE methods. Criteria were prespecified to determine when each data analysis method detected the true nonlinear model. For all 3 simulated situations, the application of population analysis with the FOCE algorithm enabled the detection and characterization of the true nonlinear models in at least a 4-fold lower dose level than the STS approach. For both of the pharmacokinetic settings, population analysis with the FO algorithm performed much more poorly than the STS approach. The superior detection and characterization of nonlinearities provided by population analysis with the FOCE algorithm should allow drug developers to better predict and define how a drug should be used in clinical practice in such situations.