Paracetamol is used worldwide for its analgesic and antipyretic actions. It has a spectrum of action similar to that of NSAIDs and resembles particularly the COX-2 selective inhibitors. Paracetamol is, on average, a weaker analgesic than NSAIDs or COX-2 selective inhibitors but is often preferred because of its better tolerance. Despite the similarities to NSAIDs, the mode of action of paracetamol has been uncertain, but it is now generally accepted that it inhibits COX-1 and COX-2 through metabolism by the peroxidase function of these isoenzymes. This results in inhibition of phenoxyl radical formation from a critical tyrosine residue essential for the cyclooxygenase activity of COX-1 and COX-2 and prostaglandin (PG) synthesis. Paracetamol shows selectivity for inhibition of the synthesis of PGs and related factors when low levels of arachidonic acid and peroxides are available but conversely, it has little activity at substantial levels of arachidonic acid and peroxides. The result is that paracetamol does not suppress the severe inflammation of rheumatoid arthritis and acute gout but does inhibit the lesser inflammation resulting from extraction of teeth and is also active in a variety of inflammatory tests in experimental animals. Paracetamol often appears to have COX-2 selectivity. The apparent COX-2 selectivity of action of paracetamol is shown by its poor anti-platelet activity and good gastrointestinal tolerance. Unlike both non-selective NSAIDs and selective COX-2 inhibitors, paracetamol inhibits other peroxidase enzymes including myeloperoxidase. Inhibition of myeloperoxidase involves paracetamol oxidation and concomitant decreased formation of halogenating oxidants (e.g. hypochlorous acid, hypobromous acid) that may be associated with multiple inflammatory pathologies including atherosclerosis and rheumatic diseases. Paracetamol may, therefore, slow the development of these diseases. Paracetamol, NSAIDs and selective COX-2 inhibitors all have central and peripheral effects. As is the case with the NSAIDs, including the selective COX-2 inhibitors, the analgesic effects of paracetamol are reduced by inhibitors of many endogenous neurotransmitter systems including serotonergic, opioid and cannabinoid systems. There is considerable debate about the hepatotoxicity of therapeutic doses of paracetamol. Much of the toxicity may result from overuse of combinations of paracetamol with opioids which are widely used, particularly in USA.