As the use of herbal medicines increases, the public health consequences of drug-herb interactions are becoming more significant. Herbal medicines share the same drug metabolizing enzymes and drug transporters, including cytochrome P450 enzymes (CYPs), glucuronosyltransferases (UGTs), and P-glycoprotein, with several clinically important drugs. Interactions of several commonly used herbal medicines, such as Ginko biloba, milk thistle, and St. John's wort, with therapeutic drugs including warfarin, midazolam, alprazolam, indinavir, saquinavir, digoxin, nifedipine, cyclosporine, tacrolimus, irinotecan, and imatinib in humans have been reported. Many of these drugs have very narrow therapeutic indices. As the herb-drug interactions can significantly alter pharmacokinetic and pharmacodynamic properties of administered drugs, the drugs interacting with herbal medicines should be identified by appropriate in vitro and in vivo methods. A good understanding of the mechanisms of herb-drug interactions is also essential for assessing and minimizing clinical risks. In vitro methods are useful for providing mechanistic information and evaluating multiple components in herbal medicines. This review describes major factors affecting the metabolism of herbal medicines, mechanisms of herb-drug interactions mediated by CYPs and UGTs, and several in vitro methods to assess the herb-drug interactions. Finally, drug interactions of Ginkgo biloba and St. John's wort, as representative herbal medicines, are described.