Prodrug is a useful approach for improving the bioavailability of therapeutic agents through increased passive transport. Carboxylesterases (CESs, EC.3.1.1.1.) that show ubiquitous expression profiles play an important role in the biotransformation of ester-containing prodrugs into their therapeutically active forms in the body. High levels of CESs are found in the liver, small intestine and lungs where prodrugs are firstly hydrolyzed before entering the systemic circulation. Rat intestine single-pass perfusion experiments have shown that CES is involved in the intestinal first-pass hydrolysis. Extensive pulmonary first-pass hydrolysis has been observed in accordance to the substrate specificity of CES1 isozyme. Hydrolysis in the human liver and lungs is mainly catalyzed by hCE1 (a human CES1 family isozyme), whereas that in the small intestine is predominantly mediated by hCE2 (a human CES2 family isozyme). hCE2 preferentially hydrolyzes substrates with a small acyl moiety such as CPT-11, due to conformational steric hindrance in its active site. In contrast, hCE1 is able to hydrolyze a variety of substrates due to spacious and flexible substrate binding region in its active site. In addition, hCE1 has been found to catalyze transesterification. Caco-2 cells mainly expresses CES1 isozyme but not CES2 isozyme. Because of the differences in substrate specificity between CES1 and CES2 enzymes, Caco-2 cell monolayer is not suitable for predicting intestinal absorption of prodrugs. These findings indicate that identification of substrate specificity of CES isozymes and development of an in vitro experimental method are essential to support rational design of prodrug.