The antitumor efficacy of genetically engineered 'living drugs', including chimeric antigen receptor and T-cell receptor T cells, is influenced by their activation, proliferation, inhibition, and exhaustion. A sensitive and reproducible cytotoxicity assay that collectively reflects these functions is an essential requirement for translation of these cellular therapeutic agents. Here, we compare various in vitro cytotoxicity assays (including chromium release, bioluminescence, impedance, and flow cytometry) with respect to their experimental setup, appropriate uses, advantages, and disadvantages, and measures to overcome their limitations. We also highlight the US Food and Drug Administration (FDA) directives for a potency assay for release of clinical cell therapy products. In addition, we discuss advanced assays of repeated antigen exposure and simultaneous testing of combinations of immune effector cells, immunomodulatory antibodies, and targets with variable antigen expression. This review article should help to equip investigators with the necessary knowledge to select appropriate cytotoxicity assays to test the efficacy of immunotherapeutic agents alone or in combination.