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The dietary compound capsaicin is responsible for the “hot and spicy” taste of chili peppers and pepper extracts. It is a valuable pharmacological agent with several therapeutic applications in controlling pain and inflammation. Emerging studies show that it displays potent anti-tumor activity in several human cancers. On a more basic research level, capsaicin has been used as a ligand to activate several types of ion-channel receptors. The pharmacological activity of capsaicin-like compounds is dependent on several factors like the dose, the route of administration and most importantly on its concentration at target tissues. The present review describes the current knowledge involving the metabolism and bioavailability of capsaicinoids in rodents and humans. Novel drug delivery strategies used to improve the bioavailability and therapeutic index of capsaicin are discussed in detail. The generation of novel capsaicin-mimetics and improved drug delivery methods will foster the hope of innovative applications of capsaicin in human disease.