Genetic variation in the receptors and other intracellular targets that mediate the pharmacodynamic effects of drugs can affect therapeutic outcomes. However, at present greater knowledge is available concerning the extent of gene variation in drug metabolizing enzymes that determine drug pharmacokinetics and, in turn, drug efficacy and toxicity. Information on the incidence of polymorphisms in the cytochrome P450 (CYP) genes that mediate phase I biotransformation is increasing, although the level of detail in the case of phase II conjugation enzymes, such as the UDP-glucuronosyltransferases (UGTs) and N-acetyltransferases (NATs), is not as extensive. It is now apparent that defective alleles that encode variant CYPs, UGTs, NATs and other biotransformation enzymes can influence the outcome of therapy. Diminished rates of drug clearance can increase the incidence of toxicity from many drugs, but may also enhance efficacy, as in the case of the proton-pump inhibitor omeprazole, that maintains therapeutic serum concentrations in individuals that carry null alleles for CYP2C19. Variant alleles of UGT1A1 are less capable of conjugating and eliminating SN-38, the active form of the topoisomerase inhibitor irinotecan, and defective alleles for NAT2 are responsible for the well-described acetylation polymorphism that leads to impaired clearance of isoniazid and other agents. This review focuses on reports that relate pharmacogenetic variation in phase I and phase II enzymes to the safety and toxicity of drug therapy and highlights a number of themes that have emerged recently that may be developed to streamline therapy for individuals.