A hepatic microsomal ethanol-oxidizing system is described both in men and rats. It is distinguished from alcohol dehydrogenase by its subcellular localization (cytosol for alcohol dehydrogenase, microsomes for this system), its pH optimum (physiological pH versus pH 10 to 11 for alcohol dehydrogenase), and its cofactor requirements (NADPH versus NAD⁺ for alcohol dehydrogenase). It also requires oxygen and is inhibited by CO, properties commonly found among microsomal drug-detoxifying enzymes. That catalase is probably not involved was revealed by the partial or complete failure of cyanide, pyrazole, azide, or 3-amino-1,2,4-triazole to inhibit the NADPH-dependent microsomal ethanol-oxidizing system under conditions which diminished catalase activity. Moreover, a combination of administration in vivo of pyrazole and addition in vitro of azide virtually blocked catalase activity and abolished 95% of a H₂O₂-dependent microsomal ethanol oxidation, whereas two-thirds of the activity of the NADPH-dependent ethanol oxidation persisted. Ethanol feeding resulted in a striking rise of hepatic NADPH-dependent microsomal ethanol-oxidizing activity, whereas under the same conditions, activities of alcohol dehydrogenase in the cytosol and of microsomal as well as of total hepatic catalase did not increase. Furthermore, blood ethanol clearance was accelerated, which suggests that microsomal ethanol oxidation may play a role in vivo. Pyrazole, which inhibits alcohol dehydrogenase strongly (affecting also other hepatic functions, including microsomal enzymes) markedly reduced but did not block ethanol metabolism in vivo or in liver slices. Even after pyrazole, ethanol clearance rates remained significantly higher in ethanol-pretreated rats. The existence of a microsomal ethanol-oxidizing system, especially its capacity to increase in activity adaptively after ethanol feeding, may explain various effects of ethanol, including proliferation of hepatic smooth endoplasmic reticulum, induction of other hepatic microsomal drug-detoxifying enzymes, and the metabolic tolerance to ethanol which develops in alcoholics.