Most peptide and protein drugs are currently used as parenteral formulations because of their poor oral bioavailability. Development of an effective oral delivery system for these macromolecular drugs requires a thorough understanding of their physicochemical properties, such as molecular weight, hydrophobicity, ionization constants, and pH stability, as well as biological barriers that restrict protein and peptide absorption from the gastrointestinal (GI) tract, including pH variability, enzymatic degradation, and membrane efflux. Various strategies currently under investigation include amino acid backbone modifications, formulation approaches, chemical conjugation of hydrophobic or targeting ligand, and use of enzyme inhibitors, mucoadhesive polymers, and absorption enhancers. However, there is only limited success because of the hostile environment of the GI tract--e.g., strong pH extremes and abundant presence of potent luminal enzymes. This review focuses on the challenges posed by the GI system and how different pharmaceutical approaches can be used to make oral delivery of protein and peptide drugs more feasible. The roles of P-glycoprotein and CYP3A4 in controlling the extent of intestinal absorption and metabolism will also be discussed.