The aim of this study was to investigate the level of misunderstanding of medication information in Korean adults after stratifying by level of health literacy and to identify the factors influencing the misunderstanding of medication information and reading amounts of information on OTC drug labels. A cross-sectional survey was performed with 375 adult participants using the survey instrument. Multiple linear regression analyses were performed to identify factors which influence misunderstanding of medication information. Participants misunderstood 20% of words on OTC drug labels, 9% of prescription drug instructions, and 9% of pictograms. Participants on average read 59% of the overall contents of the OTC drug labels. As prescription drugs’ dosing regimens became more complicated, the level of misunderstanding instructions increased. The level of misunderstanding words on OTC drug labels significantly decreased as participants had adequate health literacy (β = −18.11, p < 0.001) and higher education levels (β = −6.83, p < 0.001), after adjusting for the study variables. The level of misunderstanding instructions for prescription drugs increased as participants became older (β = 8.81, p < 0.001) and had lower education levels (β = −5.05, p < 0.001), after adjusting for the study variables. The level of misunderstanding pictograms was similar to that of misunderstanding instructions for prescription drug labels. The amount of reading information on OTC drug labels significantly increased as respondents had adequate health literacy (β = 9.27, p < 0.001), were older (β = 12.49, p < 0.001), or had chronic diseases (β = 7.49, p = 0.007). Individuals’ health literacy level, reading behaviors, and complexity of medication instructions are associated with misunderstanding of medication information. Appropriate word choices in drug labels and an improved format of medication instructions could increase understanding of medication information and prevent adverse drug reactions.