For centuries microbial biotransformation has proved to be an imperative tool in alleviating the production of various chemicals used in food, pharmaceutical, agrochemical and other industries. In the field of phar- maceutical research and development, biotransformation studies have been extensively applied to investigate the metabolism of compounds (leads, lead candidates, etc.) using animal models. The microbial biotransfor- mation phenomenon is then commonly employed in comparing metabolic pathways of drugs and scaling up the metabolites of interest discovered in these animal models for further pharmacological and toxicological evaluation. Microorganisms can conveniently afford drugs difficult obtained via synthesis. The plethora of reported microbial biotransformations along with its added benefits has already invoked further research in bioconversion of novel and structurally complex drugs. This review alternatively discusses the prospect of microbial biotransformation studies as a significant element ameliorating drug discovery and design in terms of cost-effectiveness, environment protection and greater structural diversity as compared to animal models used to study metabolism. To explicate the microbial biotransformation paradigm in drug designing 3 main areas in this aspect have been analyzed: 1--lead expansion: obtaining pharmacologically improved metabo- lites from bioactive molecules; 2--biosynthesis of precursors/intermediates involved in the production of bioactive molecules; 3--resolution of racemic mixture to obtain enantiomers possessing different pharma- cological profiles.