Recently the concept and application of the in vitro-in vivo correlation (IVIVC) for pharmaceutical dosage forms have been a main focus of attention of pharmaceutical industry, academia, and regulatory sectors. Development and optimization of formulation is an integral part of manufacturing and marketing of any therapeutic agent which is indeed a time consuming and costly process. A good correlation is a tool for predicting in vivo results based on in vitro data. IVIVC allows dosage form optimization with the fewest possible trials in man, fixes dissolution acceptance criteria, and can be used as a surrogate for further bioequivalence studies; it is also recommended by regulatory authorities. Most correlations between in vitro and in vivo data (IVIVC) rely on linear relationships. However, nonlinear IVIVC can be also observed, justified and validated. Thus the need for a tool to reliably correlate in vitro and in vivo drug release data has exceedingly increased. Such a tool shortens the drug development period, economizes the resources and leads to improved product quality. Increased activity in developing IVIVCs indicates the value of IVIVCs to the pharmaceutical industry. IVIVC can be used in the development of new pharmaceuticals to reduce the number of human studies during the formulation development as the main objective of an IVIVC is to serve as a surrogate for in vivo bioavailability and to support biowaivers. It supports and/or validates the use of dissolution methods and specification settings. This review article represents the FDA guidance, development, evaluation, and validation of an IVIVC to grant biowaivers, and to set dissolution specifications for oral dosage forms, biopharmaceutics classification systems (BCS), BCS biowaivers, application of BCS in IVIVC development and concept of mapping. The importance of dissolution media and methodology and pharmacokinetic studies in the context of IVIVC has been highlighted. The same principles of IVIVC used for oral extended release products may be applied for non-oral products such as parenteral depot formulations and novel drug delivery systems as well.