Lipid-based formulations (LBFs) are isotropic mixtures typically comprising lipids, surfactants, and/or co-solvents, in which drugs are pre-solubilized. After oral administration, LBFs are piggybacked into endogenous lipid digestion pathways. This triggers drug super-saturation and improves absorption. However, super-saturation poses a risk of drug precipitation, which generally leads to poor drug absorption. Furthermore, a series of aqueous colloidal species including digestion products (typically fatty acids and monoglycerides) and endogenous molecules (bile acids and phospholipids) increase the drug solubilization capacity of the intestinal fluid (compared with that of the normal intestinal fluid). However, the solubilization/ precipitation behavior may change according to the LBF composition (e.g., the drug loading amount and type of formulation excipients), which may ultimately lead to differences in oral absorption. This review summarizes the results of the evaluation and prediction of the effect of LBFs composition on oral absorption and provides an in-depth understanding of the drug absorption mechanisms when using LBFs.