Cell membranes protect and compartmentalise cells and their organelles. The semi-permeable nature of these membranes controls the exchange of solutes across their structure. Characterising the interaction of small molecules with biological membranes is critical to understanding of physiological processes, drug action and permeation, and many biotechnological applications. This review provides an overview of how molecular simulations are used to study the interaction of small molecules with biological membranes, with a particular focus on the interactions of water, organic compounds, drugs and short peptides with models of plasma cell membrane and stratum corneum lipid bilayers. This review will not delve on other type of membranes which might have different composition and arrangement, such as thylakoid or mitochondrial membranes. The application of unbiased molecular dynamics simulations and enhanced sampling methods such as umbrella sampling, metadynamics and replica exchange are described using key examples. This review demonstrates how state-of-the-art molecular simulations have been used successfully to describe the mechanism of binding and permeation of small molecules with biological membranes, as well as associated changes to the structure and dynamics of these membranes. The review concludes with an outlook on future directions in this field.