The efficacy of therapeutics is dependent on a drug binding to its cognate target. Optimization of target engagement by drugs in cells is often challenging, because drug binding cannot be monitored inside cells. We have developed a method for evaluating drug binding to target proteins in cells and tissue samples. This cellular thermal shift assay (CETSA) is based on the biophysical principle of ligand-induced thermal stabilization of target proteins. Using this assay, we validated drug binding for a set of important clinical targets and monitored processes of drug transport and activation, off-target effects and drug resistance in cancer cell lines, as well as drug distribution in tissues. CETSA is likely to become a valuable tool for the validation and optimization of drug target engagement.