Plasma protein binding of drugs is a well-recognised phenomena, but it is only recently that the implications for drug action in vivo have been fully appreciated. Plasma proteins, by virtue of their high concentration, control the free drug concentration in plasma and in compartments in equilibrium with plasma, thereby, effectively attenuating drug potency in vivo. The historical background and thermodynamic basis for the 'Free Drug Principle' is presented, along with special considerations for intracellular targets, deep compartments and α1-acid glycoprotein binding. Real and apparent exceptions to the principle are discussed along with a survey of citations from the recent medicinal chemistry literature.