The traditional multiple indicator dilution (MID) method is extended to incorporate cytoplasmic concentration gradients due to slow intracellular diffusion of the permeable molecule. The new model is governed by a system of partial differential equations that are solved using Laplace transformation. An analysis of the transformed solution shows that the traditional MID method is a special case of the extended model. We then use simulation analysis to show that the traditional MID model and the new diffusion model generate similar outflow curves. However, when the traditional MID equations were used to analyze outflow curves generated using a system in which intracellular diffusion is slow compared to other transport processes, the recovered rate constants for the transmembrane and excretion processes were incorrect. The diffusion model permits estimation of the rate of intracellular transport of amphipathic molecules from suitable indicator dilution data.