The intestinal mucosa is capable of metabolising drugs via phase I and II reactions. Increasingly, as a result of in vitro and in vivo (animal and human) data, the intestinal mucosa is being implicated as a major metabolic organ for some drugs. This has been supported by clinical studies of orally administered drugs (well-known examples include cyclosporin, midazolam, nifedipine and tacrolimus) where intestinal drug metabolism has significantly reduced oral bioavailability. This review discusses the intestinal properties and processes that contribute to drug metabolism. An understanding of the interplay between the processes controlling absorption, metabolism and P-glycoprotein-mediated efflux from the intestinal mucosa into the intestinal lumen facilitates determination of the extent of the intestinal contribution to first-pass metabolism. The clinical relevance of intestinal metabolism, however, depends on the relative importance of the metabolic pathway involved, the therapeutic index of the drug and the inherent inter- and intra-individual variability. This variability can stem from genetic (metabolising enzyme polymorphisms) and/or non-genetic (including concomitant drug and food intake, route of administration) sources. An overwhelming proportion of clinically relevant drug interactions where the intestine has been implicated as a major contributor to first-pass metabolism involve drugs that undergo cytochrome P450 (CYP) 3A4-mediated biotransformation and are substrates for the efflux transporter P-glycoprotein. Much work is yet to be done in characterising the clinical impact of other enzyme systems on drug therapy. In order to achieve this, the first-pass contributions of the intestine and liver must be successfully decoupled.