The major function of the placenta is to transfer nutrients and oxygen from the mother to the foetus and to assist in the removal of waste products from the foetus to the mother. In addition, it plays an important role in the synthesis of hormones, peptides and steroids that are vital for a successful pregnancy. The placenta provides a link between the circulations of two distinct individuals but also acts as a barrier to protect the foetus from xenobiotics in the maternal blood. However, the impression that the placenta forms an impenetrable obstacle against most drugs is now widely regarded as false. It has been shown that that nearly all drugs that are administered during pregnancy will enter, to some degree, the circulation of the foetus via passive diffusion. In addition, some drugs are pumped across the placenta by various active transporters located on both the fetal and maternal side of the trophoblast layer. It is only in recent years that the impact of active transporters such as P-glycoprotein on the disposition of drugs has been demonstrated. Facilitated diffusion appears to be a minor transfer mechanism for some drugs, and pinocytosis and phagocytosis are considered too slow to have any significant effect on fetal drug concentrations. The extent to which drugs cross the placenta is also modulated by the actions of placental phase I and II drug-metabolising enzymes, which are present at levels that fluctuate throughout gestation. Cytochrome P450 (CYP) enzymes in particular have been well characterised in the placenta at the level of mRNA, protein, and enzyme activity. CYP1A1, 2E1, 3A4, 3A5, 3A7 and 4B1 have been detected in the term placenta. While much less is known about phase II enzymes in the placenta, some enzymes, in particular uridine diphosphate glucuronosyltransferases, have been detected and shown to have specific activity towards marker substrates, suggesting a significant role of this enzyme in placental drug detoxification. The increasing experimental data on placental drug transfer has enabled clinicians to make better informed decisions about which drugs significantly cross the placenta and develop dosage regimens that minimise fetal exposure to potentially toxic concentrations. Indeed, the foetus has now become the object of intended drug treatment. Extensive research on the placental transfer of drugs such as digoxin and zidovudine has assisted with the safe treatment of the foetus with these drugs in utero. Improved knowledge regarding transplacental drug transfer and metabolism will result in further expansion of pharmacological treatment of fetal conditions.