In vitro permeability assays are a valuable tool for scientists during lead compound optimization. As a majority of discovery projects are focused on the development of orally bioavailable drugs, correlation of in vitro permeability data to in vivo absorption results is critical for understanding the structural–physicochemical relationship (SPR) of drugs exhibiting low levels of absorption. For more than a decade, the Caco-2 screening assay has remained a popular, in vitro system to test compounds for both intestinal permeability and efflux liability. Despite advances in artificial membrane technology and in silico modeling systems, drug compounds still benefit from testing in cell-based epithelial monolayer assays for lead optimization. This chapter provides technical information for performing and optimizing the Caco-2 assay. In addition, techniques are discussed for dealing with some of the most pressing issues surrounding in vitro permeability assays (i.e., low aqueous solubility of test compounds and low postassay recovery). Insights are offered to help researchers avoid common pitfalls in the interpretation of in vitro permeability data, which can often lead to the perception of misleading results for correlation to in vivo data.