Nasal delivery is a potential alternative for systemic availability of drugs restricted to intravenous administration, such as peptide and protein drugs. Although nasal delivery avoids the hepatic first-pass effect, the enzymatic barrier of the nasal mucosa creates a pseudo-first-pass effect. The xenobiotic metabolic activity in the nasal epithelium has been investigated in several species including humans. The Phase I, cytochrome P-450 enzymes have been studied extensively for their toxicological significance, since these enzymes metabolize inhaled pollutants into reactive metabolites which may induce nasal tumors. The cytochrome P-450 activity in the olfactory region of the nasal epithelium is higher even than in the liver, mainly because of a three- to fourfold higher NADPH-cytochrome P-450 reductase content. Phase II activity has also been found in the nasal epithelium. The delivery of peptides and proteins has been hindered by the peptidase and protease activity in the nasal mucosa. The predominant enzyme appears to be aminopeptidase among other exopeptidases and endopeptidases. The absorption of peptide drugs can be improved by using aminoboronic acid derivatives, amastatin, and other enzyme inhibitors as absorption enhancers. It is possible that some of the surfactants, e.g., bile salts, increase absorption by inhibiting the proteolytic enzymes. Thus, in addition to the permeation barriers, there also exists an enzymatic barrier to nasal drug delivery, which is created by metabolic enzymes in the nasal epithelium.