The permeability estimation from cell monolayer permeation data is usually based on 100% recovery assumption. However, poor recovery is often seen in such experiments in practice but often neglected in data interpretation. In the present study, the cellular retention kinetics during Caco-2 permeation experiments of three passively transported compounds, weakly basic propranolol [(Ϯ)-1-isopropylamino-3-(1-naphthyloxy)-2-propanol], weakly acidic ibuprofen [␣-methyl-4-(isobutyl)phenylacetic acid], and neutral testosterone (17-hydroxy-4-androsten-3-one), were determined. Furthermore, the effects of cellular retention kinetics on apparent permeability were evaluated, and the role of lysosomal sequestration in cellular retention of propranolol was explored. The cellular retention profiles were observed to be direction and concentration dependent, which may cause erroneous directionality and concentration dependence in permeability estimates. Furthermore, the lysosomal sequestration was demonstrated to contribute to the extent and kinetics of the cellular retention of propranolol.Cell monolayer permeation experiments are commonly used to predict intestinal absorption potential of drug molecules and to screen compounds for their interactions with active transporters (Polli et al., 2001). In addition, cell monolayer permeation experiments are often used to study the mechanisms of drug transfer .In in vitro permeation experiments, typically, the permeability estimates are based on the appearance kinetics of the test compound to the receiver compartment. In addition, samples from both donor and receiver sides are often collected at the final time point of the experiment to determine the recovery of the test compound. The analysis and interpretation of permeation data are often based on the assumption that the cell monolayer behaves as a single barrier for the solute transfer and that the whole mass of the studied compound is in donor and receiver compartments, i.e., the recovery is 100%. However, physiologically, the permeation barrier in cell monolayer experiments consists of various serial and parallel barriers ; furthermore, reduced recovery is often observed in permeability experiments (Polli et al., 2001). Incomplete recovery is attributed to metabolism, drug binding to the plastic surfaces, and/or cellular retention of drug (Fisher et al., 1999;Ö sth et al., 2002;Palmgrén et al., 2006). The possible bias in permeability estimates caused by poor recovery is generally acknowledged but still often neglected in the data interpretation.The mechanisms causing poor recovery and, consequently, the kinetics of apparent loss of test compound in permeation experiments may be specific to compound, experimental apparatus, and permeation barrier (Ö sth et al., 2002;Tran et al., 2004). Thus, accurate universal correction terms for poor This work was supported by the National Technology Agency of Finland (TEKES).Portions of the data presented here appeared in abstract form as follows: Heikkinen AT, Korjamo T, and Mönkkönen...