Human carboxylesterase 1 (hCE-1, CES1A1, HU1) and carboxylesterase 2 (hCE-2, hiCE, HU3) are a serine esterase involved in both drug metabolism and activation. Although both hCE-1 and hCE-2 are present in several organs, the hydrolase activity of liver and small intestine is predominantly attributed to hCE-1 and hCE-2, respectively. The substrate specificity of hCE-1 and hCE-2 is significantly different. hCE-1 mainly hydrolyzes a substrate with a small alcohol group and large acyl group, but its wide active pocket sometimes allows it to act on structurally distinct compounds of either large or small alcohol moiety. In contrast, hCE-2 recognizes a substrate with a large alcohol group and small acyl group, and its substrate specificity may be restricted by a capability of acyl-hCE-2 conjugate formation due to the presence of conformational interference in the active pocket. Furthermore, hCE-1 shows high transesterification activity, especially with hydrophobic alcohol, but negligible for hCE-2. Transesterification may be a reason for the substrate specificity of hCE-1 that hardly hydrolyzes a substrate with hydrophobic alcohol group, because transesterification can progress at the same time when a compound is hydrolyzed by hCE-1. From the standpoint of drug absorption, the intestinal hydrolysis by CES during drug absorption is evaluated in rat intestine and Caco2-cell line. The rat in situ single-pass perfusion shows markedly extensive hydrolysis in the intestinal mucosa. Since the hydrolyzed products are present at higher concentration in the epithelial cells rather than blood vessels and intestinal lumen, hydrolysates are transported by a specific efflux transporter and passive diffusion according to pH-partition. The expression pattern of CES in Caco-2 cell monolayer, a useful in vitro model for rapid screening of human intestinal drug absorption, is completely different from that in human small intestine but very similar to human liver that expresses a much higher level of hCE-1 and lower level of hCE-2. Therefore, the prediction of human intestinal absorption using Caco-2 cell monolayers should be carefully monitored in the case of ester and amide-containing drugs such as prodrugs. Further experimentation for an understanding of detailed substrate specificity for CES and development of in vitro evaluation systems for absorption of prodrug and its hydrolysates will help us to design the ideal prodrug.