To predict first‐pass and systemic cytochrome P450 (CYP) 3A‐mediated metabolism of midazolam in preterm neonates, a physiological population pharmacokinetic model was developed describing intestinal and hepatic midazolam clearance in preterm infants. On the basis of midazolam and 1‐OH‐midazolam concentrations from 37 preterm neonates (gestational age 26–34 weeks) receiving midazolam orally and/or via a 30‐minute intravenous infusion, intrinsic clearance in the gut wall and liver were found to be very low, with lower values in the gut wall (0.0196 and 6.7 L/h, respectively). This results in a highly variable and high total oral bioavailability of 92.1% (range, 67–95%) in preterm neonates, whereas this is around 30% in adults. This approach in which intestinal and hepatic clearance were separately estimated shows that the high bioavailability in preterm neonates is explained by, likely age‐related, low CYP3A activity in the liver and even lower CYP3A activity in the gut wall.