The permeability estimation from cell monolayer permeation data is usually based on 100% recovery assumption. However, poor recovery is often seen in such experiments in practice but often neglected in data interpretation. In the present study, the cellular retention kinetics during Caco-2 permeation experiments of three passively transported compounds, weakly basic propranolol [(+/-)-1-isopropylamino-3-(1-naphthyloxy)-2-propanol], weakly acidic ibuprofen [alpha-methyl-4-(isobutyl)phenylacetic acid], and neutral testosterone (17beta-hydroxy-4-androsten-3-one), were determined. Furthermore, the effects of cellular retention kinetics on apparent permeability were evaluated, and the role of lysosomal sequestration in cellular retention of propranolol was explored. The cellular retention profiles were observed to be direction and concentration dependent, which may cause erroneous directionality and concentration dependence in permeability estimates. Furthermore, the lysosomal sequestration was demonstrated to contribute to the extent and kinetics of the cellular retention of propranolol.