Miltefosine (hexadecylphosphocholine, HePC) is an alkyl phospholipid which was first developed as an anticancer agent for local treatment of skin metastases. It was later found to have remarkable activity against Leishmania parasites by the oral route and is marketed as Impavido® for this indication. The mechanism of action of HePC involves interaction with lipids and in particular membrane lipids – phospholipids and sterols. Studies of interactions between HePC and these lipids carried out in model systems suggest an affinity of HePC for cholesterol-rich lipid rafts. The uptake of HePC by cancer cells begins by insertion into the plasma membrane which may be followed by internalization. Within the plasma membrane, HePC interferes with the functioning of a number of enzymes involved in phospholipid metabolism, including protein kinase C and the phospholipases A2, C and D, and can also induce apoptosis. Effects on lipid metabolism have also been observed in Leishmania parasites. In these organisms, a proposed mechanism of HePC uptake can be proposed: HePC inserts into the outer leaflet of the plasma membrane as monomers when its concentration is below the critical micellar concentration (CMC) and as both monomers and oligomers when it is above the CMC. Thereafter, a two-subunit aminophospholipid translocase, LdMT-LdRos3, internalizes the drug. Some evidence obtained in the Caco-2 intestinal cell model suggests that a similar process may occur during the oral absorption of HePC. Finally, the use of phospholipid vesicles (liposomes) as carrier systems for HePC, reducing its toxic side-effects, is reviewed.