Biotransformation (metabolism) and interaction of drugs are the important factors in the establishment of therapeutic efficacy and safety. Knowledge on the enzymes responsible for drug metabolism is essential to assess the pharmacological effect and safety of a drug. Presence of CYP's and monooxygenases in microorganisms especially fungi is well documented and the use of microbial models may constitute an alternative or at least a complement to the use of animal and other systems, provided they can mimic the mammalian metabolism and afford any relevant information about the metabolism of the drug. Such methodology would have the advantage of reducing the demand for animals, particularly in the early phases of drug development. The other uses of the microbial biotransformation include stereoselective and regiospecific conversions of some products which is difficult to synthesis and to predict the drug interactions by using substrates which are specific and selective to CYP's. The present book provides a brief overview of type of metabolic reactions, type of CYP's present and various drug interaction studies involved with microorganisms.