Abstract Background The inappropriate use of laboratory resources, due to excessive number of tests not really necessary for patient care or by failure to order the appropriate diagnostic test, may lead to wrong, missed or delayed diagnosis, thus potentially jeopardizing patient safety. It is estimated that 5–95% of tests are currently used inappropriately, depending on the appropriateness criteria, thus significantly contributing to the potential of generating medical errors, the third leading cause of death in the US. Content In this review, we discuss the reasons as well as the medical and financial consequences of inappropriate utilization of laboratory tests. We then provide demand management (DM) tools as a means for overcoming this issue and also discuss their benefits, challenges, limitations and requirements for successful implementation. Summary and outlook When based on current evidence, adapted to local conditions and developed in close collaboration with clinicians, DM is a reasonable strategy for progressing toward better management of over- and underuse of laboratory resources.