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The free hormone hypothesis states that the biological activity of a given hormone is affected by its unbound (free) rather than protein-bound concentration in the plasma. The fundamental mathematical and physiological principles relating to this hypothesis are reviewed, along with experimental data that shed light on its validity. It is shown that whether or not this hypothesis is likely to be valid for any given hormone will depend largely on which step in the tissue uptake process (plasma flow, dissociation from plasma binding proteins, influx, or intracellular elimination) is rate-limiting to the net tissue uptake of that hormone. It is further shown that the free hormone hypothesis could hold even if tissue uptake of hormone occurred by a mechanism that acted directly on one or more circulating protein-bound pools of hormone. Indeed, many of the data previously interpreted as being inconsistent with the free hormone hypothesis are in fact readily consistent with it when its predictions are fully understood. Nevertheless, the free hormone hypothesis is not likely to be valid for all hormones with respect to all tissues. It is likely to be valid with respect to all tissues for the thyroid hormones, for cortisol, and for the hydroxylated metabolites of vitamin D. For many of the other steroid hormones, however, it is likely to be valid with respect to some tissues, but not with respect to others (in particular, the liver). And for some of the steroid hormones (in particular, progesterone) it may not hold at all.