The effects of diabetes mellitus on the pharmacokinetics and pharmacodynamics of drugs have been well described in experimental animal models; however, only minimal data exist for humans and the current knowledge regarding the effects of diabetes on these properties remains unclear. Nevertheless, it has been observed that the pharmacokinetics and pharmacodynamics of drugs are changed in subjects with diabetes. It has been reported that diabetes may affect the pharmacokinetics of various drugs by affecting (i) absorption, due to changes in subcutaneous adipose blood flow, muscle blood flow and gastric emptying; (ii) distribution, due to non-enzymatic glycation of albumin; (iii) biotransformation, due to regulation of enzymes/transporters involved in drug biotransformation; and (iv) excretion, due to nephropathy. Previously published data also suggest that diabetes-mediated changes in the pharmacokinetics of a particular drug cannot be translated to others. Although clinical studies exploring the effect of diabetes on pharmacodynamics are still very limited, there is evidence that disease-mediated effects are not limited only to pharmacokinetics but also alter pharmacodynamics. However, for many drugs it remains unclear whether these influences reflect diabetes-mediated changes in pharmacokinetics rather than pharmacodynamics. In addition, even though diabetes-mediated pharmacokinetics and pharmacodynamics might be anticipated, it is important to study the effect on each drug and not generalize from observed data. The available data indicate that there is a significant variability in drug response in diabetic subjects. The discrepancies between individual clinical studies as well as between ex vivo and clinical studies are probably due to (i) the restricted and focused population of subjects in clinical studies; (ii) failure to consider type, severity and duration of the disease; (iii) histopathological characteristics generally being missing; and (iv) other factors such as varying medication use, dietary protein intake, age, sex and obesity. The obesity epidemic in the developed world has also inadvertently influenced the directions of pharmacological research. This review attempts to map new information gained since Gwilt published his paper in Clinical Pharmacokinetics in 1991. Although a large body of research has been conducted and significant progress has been made, we still have to conclude that the available information regarding the effect of diabetes on pharmacokinetics and pharmacodynamics remains unclear and further clinical studies are required before we can understand the clinical significance of the effect. An understanding of diabetes-mediated changes as well as of the source of the variability should lead to the improvement of the medical management and clinical outcomes in patients with this widespread disease.