The bioavailability of therapeutic agents can be improved by using prodrugs which have better passive diffusion than the active agents. Intestinal hydrolysis is an important reaction in the bioconversion of prodrugs, and may be the rate-limiting factor in their absorption. Carboxylesterase (CES) is ubiquitous in most organs and is located in the endoplasmic reticulum. Single-pass perfusion experiments in rat intestine have shown that CES is the main enzyme involved in intestinal first-pass hydrolysis. In man, intestinal CESs belong to the CES2 gene family and their activity is nearly constant along the jejunum and ileum. The predominant human intestinal CES, hCE2, preferentially hydrolyzes prodrugs in which the alcohol group of a pharmacologically active molecule has been modified by the addition of a small acyl group. In preclinical animal models, CES2 isozymes are also the major intestinal enzymes although they have different substrate specificities to human CES2, while CES1 isozymes and other unidentified enzymes are also present. It is therefore difficult to predict human intestinal absorption from animal experiments. Caco-2 cells mainly express the human CES1 isozyme, hCE1, which shows quite different substrate specificity from hCE2, making Caco-2 cells unsuitable for prediction of human intestinal absorption of prodrugs. However, we have developed a novel experimental method for predicting the human intestinal absorption of prodrugs using Caco-2 cells in which CES-mediated hydrolysis has been inhibited. The expression of hCE2 shows inter-individual variation and is regulated by several mechanisms, such as gene polymorphism and epigenetic processes. There are no reports suggesting that severe toxicity is associated with prodrugs due to genetic polymorphism of the CES2 gene.