Cytochrome P450 (CYP) is a large family of well-conserved integral membrane proteins localized primarily in the membrane of the endoplasmic reticulum (ER), where these enzymes metabolize a variety of both endogenous and exogenous compounds. It has become apparent that these microsomal CYP proteins are also present in other cellular compartments, such as the cell surface and in mitochondria, where the enzymes display catalytic activity toward CYP-specific substrates, in some cases with altered substrate specificity. CYP-drug adducts exposed at the cell surface are important mediators of idiosyncratic drug toxicities. Therefore, understanding the molecular mechanisms responsible for directing these microsomal CYPs to other, non-ER cellular compartments is important. These alternatively localized CYPs should be considered as possible drug targets and as important factors during drug discovery and development, as the detoxification capacity is lower in the compartments where such CYP proteins are located. This review discusses the mechanisms of intracellular CYP transport, and the implications of the presence of CYP proteins in extra-ER compartments for drug metabolism and toxicity.