Many pharmacologically active compounds are of amphiphilic (or hydrophobic) nature. As a result, they tend to self-associate and to interact with biological membranes. This review focuses on the self-aggregation properties of drugs, as well as on their interaction with membranes. It is seen that drug-membrane interactions are analogous to the interactions between membranes and classical detergents. Phenomena such as shape changes, vesiculation, membrane disruption, and solubilization have been observed. At the molecular level, these events seem to be modulated by lipid flip-flop and formation of non-bilayer phases. The modulation of physicochemical properties of drugs by self-association and membrane binding is discussed. Pathological consequences of drug-membrane interaction are described. The mechanisms of drug solubilization by surfactants are reviewed from the physicochemical point of view and in relation to drug carrying and absorption by the organism.