Screening in phenotypic assays is an important strategy for the discovery of innovative drugs and novel targets. Here we present key strategies for developing successful phenotypic screens and prosecuting phenotypic drug discovery (PDD) programs. Successful screens incorporate physiological relevance through the use of human cell types and assay designs that have (1) strong mechanistic connection to clinical outcomes and (2) strong biological justification for both efficacy and safety. In addition to guidance for designing successful screens, we also propose incorporation of specific counterscreens at an early point in the program. The suggested counterscreens are based on analysis of 1000s of drugs and drug candidates profiled through a large set of human-based phenotypic assays. These assays include cytotoxicity in human primary vascular endothelial cells, proliferation of endothelial cells, and proliferation of lymphocytes, all under specific activation conditions. These counterscreens form a generic screening funnel to triage a large fraction of early-stage hits, binning compounds into those with undesirable mechanisms (associated with acute toxicity), mechanisms with utility for oncology indications, and mechanisms useful for autoimmune indications. The application of this screening funnel offers a standardized and more predictable path for prosecuting PDD programs, reducing the risk of failure, and improving program timelines.