The absence of any drug in the ultra-diluted homeopathic medicines coupled with unfavourable clinical trial results has painted homeopathic remedies as placebos. Different mechanisms have been forwarded to explain the anomalies but with little success. Here it is proposed that homeopathy is a form of protein-based immunotherapy and the immunogenic proteins exist in the microbial lysates, which are present in the homeopathic medicines. The microbial lysates are formed in the homeopathic medicines during their preparation, when microbes from the surrounding environment are unwittingly incorporated into the homeopathic medicines and the microbial cell lysis is induced by alcohol, a component of the drug vehicle (water-alcohol mixture), and augmented by powerful shaking. The drugs in the homeopathic medicines modulate the conformations and, in essence, the immunogenicity of the proteins present in the medicines. The modulated proteins act as immunostimulants and help in boosting and tuning both innate and adaptive immunity. In addition, bystander T cell activation and trained immunity are expected to play important roles in the therapeutic and prophylactic actions of the homeopathic medicines. The importance of dilution in homeopathy vis-à-vis the ‘law of infinitesimals’ can be appreciated by considering the effect of dilution on protein folding and the immunogenicity of proteins. In the case of ultra-diluted homeopathic medicines devoid of any drug molecule, it has been suggested that in the absence of drug-protein interaction, protein-protein interaction leads to the conformational modulation of protein molecules, where allosteric communication and synchronization of vibrating of the protein molecules play key roles. The dictum ‘like cures like’ can be understood by considering the mimicry between the antigens present on the invading pathogen and the antigens present on the proteins in the selected homeopathic medicine. The discrepancies in the clinical trial results of homeopathic medicines arising from the heterogeneities inherent in immunotherapy as well as from a strong placebo response in the clinical trials in some diseases may partly be mitigated by conducting modified clinical trials.