After the transition from in utero to newborn life, the neonate becomes solely reliant upon its own drug clearance processes to metabolise xenobiotics. Whilst most studies of neonatal hepatic drug elimination have focussed upon in vitro expression and activities of drug-metabolising enzymes, the rapid physiological changes in the early neonatal period of life also need to be considered. There are dramatic changes in neonatal liver blood flow and hepatic oxygenation due to the loss of the umbilical blood supply, the increasing portal vein blood flow, and the gradual closure of the ductus venosus shunt during the first week of life. These changes which may well affect the capacity of neonatal hepatic drug metabolism. The hepatic expression of cytochromes P450 1A2, 2C, 2D6, 2E1 and 3A4 develop at different rates in the postnatal period, whilst 3A7 expression diminishes. Hepatic glucuronidation in the human neonate is relatively immature at birth, which contrasts with the considerably more mature neonatal hepatic sulfation activity. Limited in vivo studies show that the human neonate can significantly metabolise xenobiotics but clearance is considerably less compared with the older infant and adult. The neonatal population included in pharmacological studies is highly heterogeneous with respect to age, body weight, ductus venosus closure and disease processes, making it difficult to interpret data arising from human neonatal studies. Studies in the perfused foetal and neonatal sheep liver have demonstrated how the oxidative and conjugative hepatic elimination of drugs by the intact organ is significantly increased during the first week of life, highlighting that future studies will need to consider the profound physiological changes that may influence neonatal hepatic drug elimination shortly after birth.