Homeopathic medicines stimulate your body's homeostatic mechanism so your body heals itself by dealing with the sources of your symptoms. This stimulus assists your system in clearing itself of any expressions of imbalance. The homoeopath gives you a medicine or remedy which matches your symptoms as you experience them, and which takes into account you as a person - your individual characteristics emotionally as well as physically.

Here's an example of how this works. Think of your "natural regulator" as your internal temperature gauge. If you go outside and it is very hot, your body will recognize it is too hot and begin to perspire. Your homeostatic mechanism is producing a symptom - perspiration - in an effort to cool down the body. If you go outside and it is very cold, the symptom is shivering. Your homeostatic mechanism is trying to warm the body up by shivering to produce heat.
Think about the last time you were shivering. You could not control it, and you did not stop until you were warm. It is the same way with homeopathic medicines. If you are ill and your body is showing symptoms, the symptoms will not disappear until the source of the symptoms has disappeared.
Homoeopathic main action is through via media of IMMUNE SYSTEM, and in response to antigenic attack on body very specific antibodies are released which destroys the antigenicity of the organisms and there is no drug resistance as such, because own defense systems comes into action each time there is an attack of organisms.

Homoeopathic action begins as the medicine touches the moist surface of tongue from where it directly goes into circulation of a huge network of nerves which is spread like miles in the body system, nerves are spread like electric wires in the body and from the tongue or olfactory nerves it reaches to a very specific point of weakness in immune system and starts correcting or boosting or strengthening it. Likewise you can imagine how accurate the potency and wavelength of the homoeopathic drug, each of which carries a very specific WAVELENGTH and identity and can enter the weak points of a diseased individual in matter of microseconds when the drug and the disease is matched accurately!!! So wrong medicine does not bring about any cure, and is mere waste of effort.

More details at http://drnancymalik.wordpress.com/article/how-homeopathy-works/