Capsaicinoids are botanical irritants present in chili peppers. Chili pepper extracts and capsaicinoids are common dietary constituents and important pharmaceutical agents. Use of these substances in modern consumer products and medicinal preparations occurs worldwide. Capsaicinoids are the principals of pepper spray self-defense weapons and several over-the-counter pain treatments as well as the active component of many dietary supplements. Capsaicinoids interact with the capsaicin receptor (a.k.a., VR1 or TRPV1) to produce acute pain and cough as well as long-term analgesia. Capsaicinoids are also toxic to many cells via TRPV1-dependent and independent mechanisms. Chemical modifications to capsaicinoids by P450 enzymes decreases their potency at TRPV1 and reduces the pharmacological and toxicological phenomena associated with TRPV1 stimulation. Metabolism of capsaicinoids by P450 enzymes also produces reactive electrophiles capable of modifying biological macromolecules. This review highlights data describing specific mechanisms by which P450 enzymes convert the capsaicinoids to novel products and explores the relationship between capsaicinoid metabolism and its effects on capsaicinoid pharmacology and toxicology.