The aim of this investigation was to elucidate the mechanism of skin permeation enhancement of the lipophilic drug, testosterone, by menthol. Menthol was found to form eutectic mixtures with testosterone, cholesteryl oleate, and ceramides. DSC measurements showed that menthol drastically lowers the Tm of testosterone, from 153.7 to 39.9 degrees C. The decrease in Tm resulted in an increase in the solubility of testosterone in an aqueous ethanol vehicle by 2.8-fold, which caused a corresponding 2.8-fold increase in the flux of testosterone. A further increase in skin flux, to eight times the base line, could be attributed to the effect of menthol on the skin barrier properties. This assumption is supported by DSC results showing that menthol decreases the Tm of cholesteryl oleate and ceramides and modifies the thermogram profile of isolated stratum corneum. The results of this investigation indicate that menthol affects skin permeation by a dual mechanism: by forming a eutectic with the penetrating compound, thereby increasing its solubility, and by altering the barrier properties of the stratum corneum. Moreover, this study indicates that both types of interactions must be taken into consideration when using chemical enhancers and that decreasing the melting temperature of the permeant through formation of a eutectic could be one approach for increasing solubility and permeation rates.