This article reviews recent advances in our understanding of the structure, drug interaction mechanism, and substrate molecular requirements of P-glycoprotein (P-gp) and its emerging crucial role in drug disposition and the modulation of drug interaction. In view of its wide localization in normal tissues, the broad variety of structurally and functionally unrelated substrates of P-gp, and its ATP-dependent outward-oriented transport, P-gp actively participates in intestinal secretion, blood-tissue barriers, and biliary and renal excretions for many exogenous substrates, and also performs a protective role to prevent entry of xenobiotics. Moreover, the importance of P-gp-mediated drug interactions in clinical practice can hardly be underestimated, since it may result in severe side effects, such as digitalis drug interaction. Polymorphism or single nucleotide polymorphism (SNP) associated with P-gp may exert a significant effect on the pharmacokinetic behavior of its substrates, a fact which has major clinical implications and suggests careful dose adjustment for individual treatment. Moreover, dietary components and pharmaceutical excipients may modulate P-gp activity, and as a result affect in vivo drug disposition and therapeutic efficacy; examples include grapefruit juice, Pluronic P85, PEG 300, etc. In summary, it should be emphasized that P-gp is an integral component in the process of drug discovery, development strategy,