Philips has created a "pill" that contains a microprocessor, battery, wireless radio, pump and a drug reservoir.
The idea behind the intelligent pill is that it can work out where it is in the body before it releases the medication for optimal effect.
Dutch outfit Philips says that the pill could have a massive impact on how digestive tract disorders such as Crohn's disease are treated as the technology will mean that the medication is sent directly to the location of the disease.
This means doses can be lower, reducing side effects.
While there are already pills out there that contain miniature cameras, this, says Philips, is the first that can deliver drugs.
The iPill can also measure the local temperature and report it wirelessly to an external receiver.
It is currently a prototype but Philips says it is ready for mass manufacturing.