Ethnicity is an important demographic variable contributing to interindividual variability in drug metabolism and response. In this rapidly expanding research area many genetic factors that account for the effects of ethnicity on pharmacokinetics, pharmacodynamics, and drug safety have been identified. This review focuses on recent developments that have improved understanding of the molecular mechanisms responsible for such interethnic differences. Genetic variations that may provide a molecular basis for ethnic differences in drug metabolizing enzymes (CYP 2C9, 2C19, 2D6, and 3A4), drug transporter (P-glycoprotein), drug receptors (adrenoceptors), and other functionally important proteins (eNOS and G proteins) are discussed. A better understanding of the molecular basis underlying ethnic differences in drug metabolism, transport, and response will contribute to improved individualization of drug therapy.