In recent years, there has been a globally increasing application of herbal medicines and dietary supplements to treat various chronic diseases and to promote health. However, there are increasing clinical reports on the organ toxicities associated with consumption of herbal medicines. This review updates the knowledge on metabolic activation of herbal components and its clinical and toxicological implications. Like many synthetic drugs undergoing metabolic activation to form reactive metabolites which are often associated with drug toxicity, it is recognized that some herbal components may also be converted to toxic, or even mutagenetic and carcinogenic metabolites by cytochrome P450s (CYPs) and less frequently by Phase II conjugating enzymes. This is exemplified by aristolochic acids (AAs) in Aristolochia spp, which undergo reduction of the nitro group by hepatic CYP1A1/2 or peroxidases in extrahepatic tissues to generate highly reactive cyclic nitrenium ions. The latter can react with macromolecules (DNA and protein), resulting in activation of Hras oncogene and gene mutation in renal cells and finally carcinogenesis of the kidneys. Some naturally occurring flavonoids (e.g. quercetin) and alkenylbenzenes (e.g. safrole, methyleugenol and estragole) can undergo metabolic activation by sequential 1-hydroxylation and sulfation, resulting in reactive intermediates capable of forming DNA adducts and finally genotoxicity. Additional examples are pulegone present in essential oils from many mint species; and teucrin A, a diterpenoid found in germander (Teuchrium chamaedrys) used as an adjuvant to slimming dietary supplements but caused severe hepatotoxicity. Extensive pulegone metabolism generated pcresol that was a glutathione depletory, whereas the furan ring of the diterpenoids in germander was oxidized by CYP3A4 to reactive epoxide which can inactivate hepatic CYP3A and epoxide hydrolase through covalent binding. The hepatotoxic and carcinogenic species of plant pyrrolizidine alkaloids (e.g. echimidine and jacobine), namely pyrrole-type metabolites, are generated by hepatic CYP2B6 and CYP3A4. Potential mechanisms underlying the hepatotoxicity of kava have been related to intracellular glutathione depletion and/or quinone formation. Some herbal constituents (e.g. capsaicin from chili peppers, glabridin from licorice root, oleuropein in olive oil, dially sulfone in garlic, and resveratrol found in red wine) behave as mechanism-based inhibitors of various CYPs. This may provide an explanation for some reported herb-drug interactions. In addition, the inhibition of CYPs by herbal constituents may decrease the formation of toxic metabolites and thus inhibit carcinogenesis, as CYPs play an important role in procarcinogen activation. Due to the wide use and easy availability of herbal medicines, further research should be conducted to ensure the safety and quality of herbal medicine.