The rationale for selecting a limited number of essential medicines is that it may lead to better supply, more rational use, and lower costs. Essential medicines are those that are deemed to satisfy the health care needs of the majority of the population and that should be available in the appropriate dosage forms and strengths at all times. Because selection of medicines has a considerable impact on quality of care and cost of treatment, it is one of the most cost-effective areas for intervention. A list of essential medicines may be selected for use in one or more health facilities or for the public sector as a whole. In the latter case, the list usually indicates the level of the health care system where each medicine may be used. It can also be considered a supply list. A formulary system is part of the medicine selection process. The system includes a formulary list, which is ideally based on an essential medicines list, and a formulary manual, which contains summary information on each medication on the formulary list. Standard treatment guidelines are systematically developed statements that assist prescribers in deciding on appropriate treatments for specific clinical problems. Whereas a formulary manual is medicine centered, treatment guidelines are disease centered, presenting treatment alternatives and recommending a treatment of first choice. The process of selecting essential medicines begins with defining a list of common diseases for each level of health care. The treatment of first choice for each health problem is the basis for the list of essential medicines, the national formulary system, and the treatment guidelines. The supply system should then supply the medicines that have been selected, based on this series of steps. Essential medicines should be selected on the basis of (1) relevance to the pattern of prevalent diseases, (2) proven efficacy and safety, (3) adequate scientific data and evidence of performance in a variety of settings, (4) adequate quality, (5) favorable cost-benefit ratio, (6) desirable pharmacokinetic properties, (7) possibilities for local manufacture, and (8) availability as single compounds. The drugs should be identified by the International Nonproprietary Name (INN), sometimes referred to as the generic name. General acceptance of an essential medicines list can be promoted by wide consultation with senior specialists and experts, including professional organizations and academic institutions, on the list’s development and use. An open and transparent system of regular updates is an absolute prerequisite for maintaining the authority and acceptance of an essential medicines list or formulary list. The essential medicines concept can be applied in any country, in the public and private sectors, and in rural areas as well as at referral hospitals.