Permeability assays are commonly conducted with Madin-Darby canine kidney (MDCK) cells to predict the intestinal absorption of small-molecule drug candidates. In addition, MDCK cells transfected to overexpress efflux transporters are often used to identify substrates. However, MDCK cells exhibit endogenous efflux activity for a significant proportion of experimental compounds, potentially leading to the underestimation of permeability and confounded findings in transport studies. The goal of this study was to evaluate canine Mdr1 knockout MDCK (gMDCKI) cells in permeability screening and human MDR1 substrate determination in a drug discovery setting. The gMDCKI cells were established by CRISPR-Cas9-mediated knockout of the canine Mdr1 gene in MDCKI wildtype (wt) cells. A comparison of efflux ratios (ER) between MDCKI wt and gMDCKI showed that out of 135 compounds tested, 38% showed efflux activity in MDCKI wt, while no significant efflux was observed in gMDCKI cells. Apparent permeability (Papp) from apical-to-basolateral (A-to-B) and basolateral-to-apical were near unity in gMDCKI cells, which approximated passive permeability, and 17% of compounds demonstrated increases in their Papp A-to-B values. Overexpression of human MDR1 in gMDCKI (gMDCKI-MDR1) cells enabled substrate determination without the contribution of endogenous efflux, and the assay was able to deconvolute ambiguous results from MDCKI-MDR1 and identify species differences in substrate specificity. An analysis of 395 and 474 compounds in gMDCKI and gMDCKI-MDR1, respectively, suggested physicochemical properties that were associated with low permeability correlated with MDR1 recognition. Poorly permeable compounds and MDR1 substrates were more likely to be large, flexible, and more capable of forming external hydrogen bonds. On the basis of our evaluation, we concluded that gMDCKI is a better cell line for permeability screening and efflux substrate determination than the MDCK wt cell line.