The pharmacodynamics aspects of homeopathic remedies are appraised by laboratory studies on the biological effects at various levels (cellular, molecular and systemic). The major question is how these medicines may work in the body. The possible answers concern the identification of biological targets, the means of drug–receptor interactions, the mechanisms of signal transmission and amplification, and the models of inversion of effects according to the traditional ‘simile’ rule. These problems are handled by two experimental and theoretical lines, according to the doses or dilutions considered (low-medium versus high dilutions). Homeopathic formulations in low-medium dilutions, containing molecules in the range of ultra-low doses, exploit the extreme sensitivity of biological systems to exogenous and endogenous signals. Their effects are interpreted in the framework of hormesis theories and paradoxical pharmacology. The hypotheses regarding the action mechanisms of highly diluted/dynamized solutions (beyond Avogadro–Loschmidt limit) variously invoke sensitivity to bioelectromagnetic information, participation of water chains in signalling, and regulation of bifurcation points of systemic networks. High-dilution pharmacology is emerging as a pioneering subject in the domain of nanomedicine and is providing greater plausibility to the puzzling claims of homeopathy.