Drug-induced hypersensitivity reactions are a major problem in both clinical treatment and drug development. This review covers recent developments in our understanding of the pathogenic mechanisms involved, with special focus on the potential role of metabolism and bioactivation in generating a chemical signal for activation of the immune system. The possible role of haptenation and neoantigen formation is discussed, alongside recent findings that challenge this paradigm. Additionally, the essential role of costimulation is examined, as are the potential points whereby costimulation may be driven by reactive metabolites. The relevance of local generation of metabolites in determining the location and character of a reaction is also covered.