The rapidly increasing availability of drug receptor structural characteristics has permitted the receptor-guided synthesis of potential new drug molecules. This synthesis strategy frequently results in the creation of polycyclic and highly hydrophobic compounds, with attendant poor oral bioavailability resulting from low solubility and slow dissolution rate in the primarily aqueous contents of the gastrointestinal (GI) tract. In an attempt to improve the solubility-limited bioavailabiliy associated with these compounds, formulators have turned to the use of lipid excipients in which the compounds can be solubilized prior to oral administration. This new class of excipients presents the pharmaceutical scientist with a number of new challenges at all stages of the formulation development process, beginning with the excipient selection and stability assessment of the prototype formulation, up to and including scale-up and mass production of the final market-image product. The interaction of lipid-based formulations with the gastrointestinal system and associated digestive processes presents additional challenges and opportunities that will be understood more fully as we begin to unravel the intricacies of the GI processing of lipid excipients. For example, an increasing body of evidence has shown that certain lipids are capable of inhibiting both presystemic drug metabolism and drug efflux by the gut wall mediated by p-glycoprotein (PGP). And, it is well known that lipids are capable of enhancing lymphatic transport of hydrophobic drugs, thereby reducing drug clearance resulting from hepatic first-pass metabolism. This review addresses the current state of knowledge regarding oral lipid-based formulation development and scale-up issues and the physiological and biopharmaceutical aspects pertinent to the development of an orally bioavailable and efficacious dosage form.