It has been claimed that the homeopathic principle of ‘similarity’ (or ‘similia’) and the use of individualized remedies in extremely low doses conflicts with scientific laws, but this opinion can be disputed on the basis of recent scientific advances. Several mechanisms to explain the responsiveness of cells to ultra-low doses and the similarity as inversion of drug effects, have again been suggested in the framework of hormesis and modern paradoxical pharmacology. Low doses or high dilutions of a drug interact only with the enhanced sensitivities of regulatory systems, functioning as minute harmful stimuli to trigger specific compensatory healing reactions. Here we review hypotheses about homeopathic drug action at cellular and molecular levels, and present a new conceptual model of the principle of similarity based on allosteric drug action. While many common drugs act through orthostatic chemical interactions aimed at blocking undesired activities of enzymes or receptors, allosteric interactions are associated with dynamic conformational changes and functional transitions in target proteins, which enhance or inhibit specific cellular actions in normal or disease states. The concept of allostery and the way it controls physiological activities can be broadened to include diluted/dynamized compounds, and may constitute a working hypothesis for the study of molecular mechanisms underlying the inversion of drug effects.