The current trend in the drug design is to develop new clinically effective agents through the molecular modification of a lead nucleus. A lead compound in drug discovery is a chemical compound that has pharmacological or biological activity. Lead optimization is the synthetic modification of a biologically active compound, to fulfill all stereoelectronic, physicochemical, pharmacokinetic and toxicologic required for clinical usefulness. The main objective of this review is to discuss the methods of lead discovery, lead optimization and its role in molecular modification of lead compound in analog design.