Hepoxilins are biologically relevant epoxy‐hydroxy eicosanoids synthesized through the 12S‐lipoxygenase (12S‐LOX) pathway of the arachidonic acid (AA) metabolism. The pathway is bifurcated at the level of 12S‐hydroperoxy‐eicosatetraenoic acid (12S‐HpETE), which can either be reduced to 12S‐hydro‐eicosatetraenoic acid (12S‐HETE) or converted to hepoxilins. The present review gives an update on the biochemistry, biology and clinical aspects of hepoxilin‐based drug development. The isolation, cloning and characterization of a rat leukocyte‐type 12S‐LOX from rat insulinoma RINm5F cells revealed a 12S‐LOX possessing an intrinsic 8S/R‐hydroxy‐11,12‐epoxyeicosa‐5Z,9E,14Z‐trienoic acid (HXA3) synthase activity. Site‐directed mutagenesis studies on rat 12S‐LOX showed that the HXA3 synthase activity was impaired when the positional specificity of AA was altered. Interestingly, amino acid Leu353, and not conventional sequence determinants Met419 and Ile418, was found to be a crucial sequence determinant for AA oxygenation. The regulation of HXA3 formation is dependent on the cellular overall peroxide tone. Cellular glutathione peroxidases (cGPxs) compete with HXA3 synthase for 12S‐HpETE as substrate either to reduce to 12S‐HETE or to convert to HXA3, respectively. Therefore, RINm5F cells, which are devoid of GPxs, are capable of converting AA or 12S‐HpETE to HXA3 under basal conditions, whereas cells overexpressing cGPx are unable to do so. HXA3 exhibits a myriad of biological effects, most of which are associated with the stimulation of intracellular calcium or the transport of calcium across the membrane. The activation of HXA3–G‐protein‐coupled receptors explains many of the extracellular effects of HXA3, including AA‐ and diacylglycerol (DAG) release in human neutrophils, insulin secretion in rat pancreatic β‐cells or islets, and synaptic actions in the brain. The availability of stable analogs of HXA3, termed 10‐hydroxy‐11,12‐cyclopropyl‐eicosa‐5Z,8Z,14Z‐trienoic acid derivatives (PBTs), recently made several animal studies possible and explored the role of HXA3 as a therapeutic in treatment of diseases. Thus, PBT‐3 induced apoptosis in K562 tumour cells and inhibited growth of K562 CML solid tumours in nude mice. HXA3 inhibited bleomycin‐evoked lung fibrosis and inflammation in mice and the raised insulin level in the circulation of rats. At low glucose concentrations (0–3 mm), HXA3 also stimulated insulin secretion in RINm5F cells through the activation of IRE1α, an endoplasmic reticulum‐resident kinase. The latter regulates the protein folding for insulin biosynthesis. In conclusion, HXA3‐mediated signaling may be involved in normal physiological functions, and hepoxilin‐based drugs may serve as therapeutics in diseases such as type II diabetes and idiopathic lung fibrosis.