Kernicterus, the primary manifestation of neonatal bilirubin toxicity, remains an important complication of unconjugated hyperbilirubinaemia despite advances made with phototherapy and exchange transfusions. It results from the penetration of bilirubin into neuronal tissues of the CNS with subsequent damage to the mitochondrion. A number of factors may modify or potentiate bilirubin toxicity, including drugs administered to the infant. The importance of drug-bilirubin interactions in the pathogenesis of kernicterus was first realised quite inadvertently in the 1950s, and the potential risk for significant drug-bilirubin interactions has since become an important consideration in neonatal drug therapy. All drugs intended for use in newborn infants should be evaluated for their capacity to displace bilirubin. A number of techniques have been developed which have facilitated investigation of the mechanisms mediating the bilirubin-displacing effects of drugs and the pharmacokinetics of drug-bilirubin interactions. Further, the clinical risk for inducing kernicterus has been investigated for many of the drugs to which neonates may be exposed by direct administration, transplacentally, or through breast milk. This review summarises the available knowledge concerning the physicochemical properties and toxicities of bilirubin, reviews the methodologies used in evaluating drug-bilirubin interactions, and focuses on the mechanisms, pharmacokinetics and clinical significance of the bilirubin displacing effects of antibiotics, anticonvulsants, diuretics, and other important drug classes used in the treatment of neonates.