Irinotecan is a critical anticancer drug used to treat metastatic colorectal cancer and advanced pancreatic ductal adenocarcinoma by obstructing topoisomerase 1; however, it can cause minor-to-severe and life-threatening adverse effects. UDP glucuronosyltransferase family 1 member A1 ( UGT1A1 ) polymorphisms increase the risk of irinotecan-induced neutropenia and diarrhea. Hence, screening for UGT1A1 polymorphisms before irinotecan-based chemotherapy is recommended to minimize toxicity, whereas liposomes offer the potential to deliver irinotecan with fewer side effects in patients with pancreatic ductal adenocarcinoma. This review presents a comprehensive overview of the effects of genotype-guided dosing of irinotecan on UGT1A1*28 and UGT1A1*6 variants, incorporating pharmacogenomic research, optimal regimens for metastatic colorectal and pancreatic cancer treatment using irinotecan, guidelines for toxicity reduction, and an evaluation of the cost-effectiveness of UGT1A1 genotype testing.