New pharmaceuticals, innovative combinations of approved agents, and novel treatment modalities have resulted in a marked increase in the need for clinical trials. Evidence for treatment efficacy is best derived from large phase 3 randomized, controlled clinical trials. However, phase 3 investigations are lengthy and expensive, and consume patient resources. Furthermore, some diseases and treatment indications are rare, and adequate numbers of patients for a definitive phase 3 trial do not exist. Consequently, it is imperative for clinicians to understand phase 2 trial design, since their interpretation is required to apply the findings in clinical practice appropriately. The complexity of phase 2 studies is explored, including unique designs, possible use of randomization, and other key elements necessary for interpretation of phase 2 trials. Specific examples and application of these concepts are discussed in this review.