Melanin binding affects drug distribution and retention in pigmented ocular tissues, thereby affecting drug response, duration of activity and toxicity. Therefore, it is a promising possibility for drug targeting and controlled release in the pigmented cells and tissues. Intracellular unbound drug concentrations determine pharmacological and toxicological actions, but analyses of unbound vs. total drug concentrations in pigmented cells are lacking. We studied intracellular binding and cellular drug uptake in pigmented retinal pigment epithelial cells and in non-pigmented ARPE-19 cells with five model drugs (chloroquine, propranolol, timolol, diclofenac, methotrexate). The unbound drug fractions in pigmented cells were 0.00016–0.73 and in non-pigmented cells 0.017–1.0. Cellular uptake (i.e. distribution ratio Kp), ranged from 1.3 to 6300 in pigmented cells and from 1.0 to 25 in non-pigmented cells. Values for intracellular bioavailability, Fic, were similar in both cells types (although larger variation in pigmented cells). In vitro melanin binding parameters were used to predict intracellular unbound drug fraction and cell uptake. Comparison of predictions with experimental data indicates that other factors (e.g. ion-trapping, lipophilicity-related binding to other cell components) also play a role. Melanin binding is a major factor that leads to cellular uptake and unbound drug fractions of a range of 3–4 orders of magnitude indicating that large reservoirs of melanin bound drug can be generated in the cells. Understanding melanin binding has important implications on retinal drug targeting, efficacy and toxicity.