One of the most common adverse effects of traditional Japanese kampo and traditional Chinese medicine is pseudoaldosteronism caused by licorice. In this review, the authors describe the mechanisms of licorice-induced pseudoaldosteronism by the pharmacokinetics of chemical constituents and its metabolites containing licorice. Glycyrrhizin (GL), the main constituent of licorice, is absorbed as glycyrrhetinic acid (GA), which is a metabolite of GL produced by enterobacteria before its release into the circulation. Circulating GA is metabolized in the liver to become 3-monoglucuronyl-glycyrrhetinic acid (3MGA), which is excreted into the bile via multidrug resistance protein 2 (Mrp2). If Mrp2 function is damaged for some reason, 3MGA is secreted from the liver into the circulation, and excreted into the urine via organic anion transporters expressed at the basolateral side of tubular epithelial cells. Circulating GA cannot be excreted into the urine since GA binds highly to serum albumin and thus does not pass through glomerular filtration and is not a substrate of transporters expressed on tubular epithelial cells. Licorice-induced pseudoaldosteronism develops due to the inhibition of type 2 11β-hydrosteroid dehydrogenase (11β-HSD2) which results in the accumulation of cortisol in tubular epithelial cells that activate mineral corticoid receptors to stimulate the excretion of potassium that results in hypokalemia. GA, unlike 3MGA, cannot pass through tubular epithelial cells and cannot inhibit the enzyme in the cells. Therefore, 3MGA may be a genuine causative agent for licorice-induced pseudoaldosteronism. When licorice is used, 3MGA in plasma or urine could function as a marker compound to prevent the adverse effects.