Classical pharmaceutical research and development relies on the identification and validation of i) membranepermeable small molecules or ii) extracellular targets that are able to interfere with cellular key signaling pathways. During the last two decades the direct intracellular delivery of macromolecules developed into a novel paradigm to manipulate cell functions. This technique, commonly referred to as protein transduction, is based on the ability of certain peptides, designated as cell penetrating peptides (CPPs), to cross the cell membrane and deliver cargos such as peptides and proteins. Although protein transduction has been widely applied the process of cellular uptake remains poorly understood and therapeutic applications are rare thus far. The mechanism by which CPP-modified proteins adhere to, and cross the plasma membrane of cells as well as the subsequent intracellular trafficking is currently extensively investigated. While there is consent that CPP-cargos are internalized via endocytotic pathways the actual membrane translocation mechanism remains unclear. Recent studies indicate that CPP-cargo trapped in endosomal vesicles can be released into the cytosol by direct membrane perturbation or by retrograde delivery as demonstrated for various toxins. The present review seeks to outline the current state-of-the-art concerning the mechanism of protein transduction. A further mechanistic understanding will be critical to design transduction strategies that may open the door for cell-impermeable compounds to become intracellular effectors.