Organisms are exposed to epoxide-containing compounds from both exogenous and endogenous sources. In mammals, the hydration of these compounds by various epoxide hydrolases (EHs) can not only regulate their genotoxicity but also, for lipid-derived epoxides, their endogenous roles as chemical mediators. Recent findings suggest that the EHs as a family represent novel drug discovery targets for regulation of blood pressure, inflammation, cancer progression, and the onset of several other diseases. Knowledge of the EH mechanism provides a solid foundation for the rational design of inhibitors, and this review summarizes the current understanding of the catalytic mechanism of the EHs. Although the overall EH mechanism is now known, the molecular basis of substrate selectivity, possible allosteric regulation, and many fine details of the catalytic mechanism remain to be solved. Finally, recent development in the design of EH inhibitors and the EH biological role are discussed.