The MTT assay for cellular metabolic activity is almost ubiquitous to studies of cell toxicity; however, it is commonly applied and interpreted erroneously. We investigated the applicability and limitations of the MTT assay in representing treatment toxicity, cell viability, and metabolic activity. We evaluated the effect of potential confounding variables on the MTT assay measurements on a prostate cancer cell line (PC-3) including cell seeding number, MTT concentration, MTT incubation time, serum starvation, cell culture media composition, released intracellular contents (cell lysate and secretome), and extrusion of formazan to the extracellular space. We also assessed the confounding effect of polyethylene glycol (PEG)-coated gold nanoparticles (Au-NPs) as a tested treatment in PC-3 cells on the assay measurements. We additionally evaluated the applicability of microscopic image cytometry as a tool for measuring intracellular MTT reduction at the single-cell level. Our findings show that the assay measurements are a result of a complicated process dependant on many of the above-mentioned factors, and therefore, optimization of the assay and rational interpretation of the data is necessary to prevent misleading conclusions on variables such as cell viability, treatment toxicity, and/or cell metabolism. We conclude, with recommendations on how to apply the assay and a perspective on where the utility of the assay is a powerful tool, but likewise where it has limitations.