Patients vary considerably in their response to drug therapy. A drug that proves to be pharmacologically effective in some patients at a given dose may be ineffective or even toxic in others. The interindividual variability in drug response represents a major challenge in drug therapy, particularly for drugs with narrow therapeutic index. The intensity and duration of a drug action are determined not only by pharmacokinetic processes, but also by pharmacodynamic processes. Therefore, the variability in drug response is a result of the variability in either pharmacokinetic or pharmacodynamic processes, or a combination of both. The purpose of this paper is to review the sources that contribute to pharmacokinetic and pharmacodynamic variability. Although the main focus will be on the genetic variability, the impact of environmental factors on drug response will also be discussed. Finally, the application and limitation of the concept of personalized medicine will be briefly discussed.