Abstract: A medication dispensing system for use in a home, assisted living, nursing home, or other outpatient setting includes a dispensing apparatus and a control system. The dispensing apparatus is compact and portable and broadly comprises a cassette and a dispensing unit for receiving medication vials and selectively and automatically dispensing medications from the medication vials. The control system receives data regarding the medications to be received in the dispensing apparatus, instructs the dispensing apparatus to dispense the medications according to a medication regimen, monitors patient usage of the dispensing system, and alerts the patient and/or caregiver when medications are ready to be taken or that scheduled medications have not been taken. The medication dispensing system is configured for use with standard medication vials fitted with specially designed vial caps for interfacing with the dispensing unit so as to singulate and selectively retrieve the medications from the medication vials.