Lactulose is one of the most frequently utilised agents in the treatment of constipation and hepatic encephalopathy because of its efficacy and good safety profile. The key to understanding the possible modes of action by which lactulose achieves its therapeutic effects in these disorders lies in certain pharmacological phenomena: (a) lactulose is a synthetic disaccharide that does not occur naturally; (b) there is no disaccharidase on the microvillus membrane of enterocytes in the human small intestine that hydrolyses lactulose; and (c) lactulose is not absorbed from the small intestine. Thus, the primary site of action is the colon in which lactulose is readily fermented by the colonic bacterial flora with the production of short-chain fatty acids and various gases. The purpose of this review is to focus on some pertinent basic aspects of the clinical pharmacology of lactulose and to discuss the possible mechanisms by which lactulose benefits patients with constipation and hepatic encephalopathy.