Ligand efficiency (i.e., potency/size) has emerged as an important metric in drug discovery. In general, smaller, more efficient ligands are believed to have improved prospects for good drug properties (e.g., bioavailability). Our analysis of thousands of ligands across a variety of targets shows that ligand efficiency is dependent on ligand size with smaller ligands having greater efficiencies, on average, than larger ligands. We propose two primary causes for this size dependence: the inevitable reduction in the quality of fit between ligand and receptor as the ligand becomes larger and more complex and the reduction in accessible ligand surface area on a per atom basis as size increases. These results have far-ranging implications for analysis of high-throughput screening hits, fragment-based approaches to drug discovery, and even computational models of potency.