Despite the advent of biotechnology and modern methods of combinatorial chemistry and rational drug design, nature still plays a surprisingly important role as a source of new pharmaceutical compounds. These are marketed either as herbal drugs or as single active ingredients. South American tropical ecosystems (or the Neotropics) encompass one-third of the botanical biodiversity of the planet. For centuries, indigenous peoples have been using plants for healing purposes, and scientists are making considerable efforts in order to validate these uses from a pharmacological/phytochemical point of view. However, and despite the unique plant diversity in the region, very few natural pharmaceutical ingredients from this part of the world have reached the markets in industrialized countries. The present review addresses the importance of single active ingredients and herbal drugs from South American flora as natural ingredients for pharmaceuticals; it highlights the most relevant cases in terms of species of interest; and discusses the key entry barriers for these products in industrialized countries. It explores the reasons why, in spite of the region's competitive advantages, South American biodiversity has been a poor source of natural ingredients for the pharmaceutical industry. Copyright © 2010 John Wiley & Sons, Ltd.