Phenacetin, introduced in 1887, was used principally as an analgesic, and was the first NSAID and fever reducer to go on the market. Typical doses of 300mg to 500mg a day result in an analgesic effect. Its analgesic effects are due to its actions on the sensory tracts of the spinal cord. In addition, phenacetin has a depressant action of the heart, where it acts as a negative inotrope. It is an antipyretic, acting on the brain to decrease the temperature set point. It is also used to treat rheumatoid arthritis (subacute type), intercostal neuralgia, and some forms of ataxia.

Phenacetin, and products containing phenacetin have been shown in an animal model to be carcinogenic. In humans, many case reports have implicated products containing phenacetin in urothelial neoplasms, especially transitional cell carcinoma of the renal pelvis. In one prospective series, phenacetin was associated with an increased risk of death due to urologic or renal diseases, death due to cancers, and death due to cardiovascular diseases.
In addition, people with glucose-6-phosphate dehydrogenase deficiency may experience acute hemolysis while taking this drug. Acute hemolysis is possible in the case of patients who develop an IgM response to Phenacetin leading to immune complexes that bind to erythrocytes in blood. The erythrocytes are then lysed when the complexes activate the complement cascade.

Phenacetin was widely used until the third quarter of the twentieth century, but was then largely replaced by non-carcinogenic drugs. Some branded phenacetin-based preparations continued to be sold, but with the phenacetin replaced by safer alternatives. A popular brand of phenacetin was Roche's Saridon, which was reformulated in 1983 to contain propyphenazone, paracetamol and caffeine. Both propyphenazone and paracetamol are metabolites of phenacetin with similar analgesic and antipyretic effects, but the new formulation has not been found to have phenacetin's carcinogenicity.

In Norway phenacetin is sold perscription over-the-counter with caffeine in a preparation know as Fenazon-Koffein. One tablet of Fenazon-Koffein contains 500mg phenacetin and 100mg caffeine along with filler products such as glucose.