It is well recognized that liver disease may influence the disposition of many drugs. Conversely, it has been suggested that knowledge of the disposition of a model drug might provide an index of certain aspects of hepatic function. This review discusses the physiology of drug disposition and indicates how recent progress in understanding the determinants of drug disposition has provided useful indices of individual aspects of hepatic function. Topics which are discussed are the interpretation of pharmacokinetic parameters as indices of hepatic function, including half–life clearance, and intrinsic clearance. Utilizing the “intact hepatocyte hypothesis” as an operational model, an approach is described that uses the pharmacokinetic disposition of high and low intrinsic clearance drugs following p.o. and i.v. administration to provide quantitative estimates of hepatic function, flow to functioning hepatocytes, and the extent of portasystemic shunting through the liver. Thus, the theoretical basis for quantitation of certain aspects of hepatic function are available. It remains to be determined whether these indices will provide clinically useful measures to follow the natural history of hepatic disease.