Gemcitabine (2′,2′-difluoro 2′-deoxycytidine, dFdC) is the most important cytidine analogue developed since cytosine arabinoside (Ara-C). The evidence of its potent antitumor activity in a wide spectrum of in vitro and in vivo tumor models has been successfully confirmed in the clinical setting. Despite structural and pharmacological similarities to Ara-C, gemcitabine displays distinctive features of cellular pharmacology, metabolism and mechanism of action. Following influx through the cell membrane via nucleoside transporters, gemcitabine undergoes complex intracellular conversion to the nucleotides gemcitabine diphosphate (dFdCDP) and triphosphate (dFdCTP) responsible for its cytotoxic actions. The cytotoxic activity of gemcitabine may be the result of several actions on DNA synthesis. dFdCTP competes with deoxycytidine triphosphate (dCTP) as an inhibitor of DNA polymerase. dFdCDP is a potent inhibitor of ribonucleoside reductase, resulting in depletion of deoxyribonucleotide pools necessary for DNA synthesis and, thereby potentiating the effects of dFdCTP. dFdCTP is incorporated into DNA and after the incorporation of one more nucleotide leads to DNA strand termination. This extra nucleotide may be important in hiding the dFdCTP from DNA repair enzymes, as incorporation of dFdCTP into DNA appears to be resistant to the normal mechanisms of DNA repair. Gemcitabine can be effectively inactivated mainly by the action of deoxycytidine deaminase to 2,2′-difluorodeoxyuridine. Also, 5′-nucleotidase opposes the action of nucleoside kinases by catalysing the conversion of nucleotides back to nucleosides. Additional sites of action and self-potentiating effects have been described. Evidence that up- or down-regulation of the multiple membrane transporters, target enzymes, enzymes involved in the metabolism of gemcitabine and alterations in the apoptotic pathways may confer sensitivity/resistance to this drug, has been provided in experimental models and more recently also in the clinical setting. Synergism between gemcitabine and several other antineoplastic agents has been demonstrated in experimental models based on specific pharmacodynamic interactions. Knowledge of gemcitabine cellular pharmacology and its molecular mechanisms of resistance and drug interaction may thus be pivotal to a more rational clinical use of this drug in combination regimens and in tailored therapy.