Biomarkers are the measurable characteristics of an individual that may represent risk factors for a disease or outcome, or that may be indicators of disease progression or of treatment-associated changes. In general, the process by which biomarkers, once identified, might be translated into clinical practice has received scant attention in recent psychiatric literature. A body of work in diagnostic development suggests a framework for evaluating and validating novel biomarkers, but this work may be unfamiliar to clinical and translational researchers in psychiatry. Therefore, this review focuses on the steps that might follow the identification of putative biomarkers. It first addresses standard approaches to characterizing biomarker performance, followed by demonstrations of how a putative biomarker might be shown to have clinical relevance. Finally, it addresses ways in which a biomarker-based test might be validated for clinical application in terms of efficacy and cost-effectiveness.