Drug metabolism is the major determinant of drug clearance and, because of polymorphic or inducible expression of drug-metabolising cytochrome P450s (CYPs), is the factor most frequently responsible for interindividual differences in pharmacokinetics. A number of well characterised CYP substrates and inhibitors have been identified that allow precise measurements of individual CYP isoforms. Their use, alone or in combination, facilitates the phenotype characterisation of hepatocytes in vitro and in vivo. Two procedures are used for in vitro investigation of the metabolic profile of a drug: incubation with microsomes and incubation with metabolically competent cells. The major limitation of microsomes is that they express phase I activities, but only part of phase II activities, and can only be used for short incubation times. When intact cells are used, gene expression, metabolic pathways, cofactors/enzymes and plasma membrane are largely preserved, but fully differentiated cells such as primary cultured hepatocytes need to be used, since hepatoma cell lines have only very low and partial CYP expression. CYP-engineered cells or their microsomes ('supersomes') have made the identification of the CYPs involved in the metabolism of a drug candidate straightforward and easier. Inhibition of CYP is an undesirable feature for a drug candidate, and needs to be addressed by examining whether the drug candidate inhibits the metabolism of other compounds or whether other compounds inhibit the metabolism of the drug candidate. Such experiments can be conducted both with microsomes and in cells. The major limitation of microsomes is that inhibition parameters may not accurately reflect the situation in vivo, since the contribution of drug transport is not considered. The best picture of a potential drug-drug interaction can be obtained in metabolically competent hepatocytes. Screening of CYP inducers cannot be done in microsomes. It requires the use of a cellular system fully capable of transcribing and translating CYP genes, and can be monitored in vitro as an increase in enzyme mRNA or activity. Human hepatocytes in primary culture respond well to enzyme inducers during the first few days; this ability is lost thereafter. Rat hepatocytes are much less stable and soon become unresponsive to inducers. Hepatoma cell lines respond poorly to inducers, although the induction of a few isoenzymes has been reported. Primary cultured hepatocytes are still the unique in vitro model that allows global examination of the inductive potential of a drug.