A simple and sensitive RP-HPLC-UV method was developed and validated for simultaneous determination of atenolol and propranolol and subsequently applied to investigate the effect of dimethyl sulfoxide in rat in situ intestinal permeability studies. Atenolol (400 microm) and propranolol (100 microm) were perfused in the small intestine of anaesthetized (pentobarbitone sodium 60 mg/kg, i.p.) male Sprague-Dawley rats either in the presence (1, 3 and 5%) or in the absence of dimethyl sulfoxide. There was no significant alteration (p > 0.05) in the permeability of atenolol and propranolol, which indicated there was no effect of various concentrations of dimethyl sulfoxide (1-5%) on the membrane integrity of the rat intestinal tissues. The analytical method was validated on a C(4) column with a mobile phase comprising ammonium acetate buffer (pH 3.5, 0.02 m) and acetonitrile in the ratio of 30:70 (v/v) at a flow rate of 1.0 mL/min. The validated method was found to be accurate and precise and stability studies were carried out at different storage conditions and both analytes were found to be stable. These findings are applicable for determining the absorbability of water-insoluble drugs and new chemical entities for the purpose of classifying them in the biopharmaceutical classification system.