The occurrence of low systemic availability due to significant metabolism or poor absorption of orally administered drugs has been well recognized. Three rate controlling factors affecting the oral absorption: unstirred water layer, membrane limitation, or flow limitation, have been identified. These are much affected by the physicochemical properties of the drug: pKA, water/lipid solubility, structural mimicry to endogenous substrates for transport proteins, and the physiology of the GI tract. Drug metabolizing enzymes are found to be present in the intestine, albeit the content is lower than that found in liver. The presence of pre-absorptive versus post-absorptive intestinal metabolism is presently discussed in experimental sets of data with luminal and systemic administration of the drugs in the vascularly perfused rat small intestine preparation. The effect of the anterior anatomical placement of the intestine and its contribution to metabolism, in relation to that for the liver, has been examined in our laboratory by the perfused intestine-liver preparation. The effect of concentration and flow have been studied and general principles governing drug absorption and metabolism in the intestine and the subsequent effects on the liver have been discussed.