Cytochrome P450 (CYP) induction-mediated interaction is one of the major concerns in clinical practice and for the pharmaceutical industry. There are two major issues associated with CYP induction: a reduction in therapeutic efficacy of comedications and an induction in reactive metabolite-induced toxicity. Because CYP induction is a metabolic liability in drug therapy, it is highly desirable to develop new drug candidates that are not potent CYP inducer to avoid the potential of CYP induction-mediated drug interactions. For this reason, today, many drug companies routinely include the assessment of CYP induction at the stage of drug discovery as part of the selection processes of new drug candidates for further clinical development. The purpose of this article is to review the molecular mechanisms of CYP induction and the clinical implications, including pharmacokinetic and pharmacodynamic consequences. In addition, factors that affect the degree of CYP induction and extrapolation of in vitro CYP induction data to in vivo situations will also be discussed. Finally, assessment of the potential of CYP induction at the drug discovery and development stage will be discussed.