The objective of this review is to survey the recent literature regarding the applications of microdialysis in pharmacokinetic studies and facilitating many other studies in peripheral tissues such as muscle, subcutaneous adipose tissue, heart, lung, etc. It has been reported extensively that microdialysis is a useful technique for monitoring free concentrations of compounds in extracellular fluid (ECF), and it is gaining popularity in pharmacokinetic and pharmacodynamic studies, both in experimental animals and humans. The first part of this review discusses the use of microdialysis technique for ECF sampling in peripheral tissues in animal studies. The second part of the review describes the use of microdialysis for ECF sampling in peripheral tissues in human studies. Microdialysis has been applied extensively to measure both endogenous and exogenous compounds in ECF. Of particular benefit is the fact that microdialysis measures the unbound concentrations in the peripheral tissue fluid which have been shown to be responsible for the pharmacological effects. With the increasing number of applications of microdialysis, it is obvious that this method will have an important place in studying drug pharmacokinetics and pharmacodynamics.