1. Administration of ethanol intraperitoneally at low dosages (10-25 mg/kg) to rats stimulates hepatic microsomal mixed-function oxidase activity in vitro. 2. Pretreatment with ethanol administered orally has no effect on in vivo drug metabolism as measured by pentobarbitone plasma half-life and has no effect on the excretion of ascorbic acid. Ethanol administration does not enhance its own binding to cytochrome P-450. 3. These observations suggest that the administration of ethanol, at moderate dosage, does not give rise to induction of hepatic cytochrome P-450. 4. Unwashed hepatic microsomes are contaminated with alcohol dehydrogenase, but pretreatment with ethanol does not increase microsomal generation of NADH. 5. Pretreatment with ethanol has no stimulatory effect on NADH-NADP+ transhydrogenation. 6. The stimulation of hepatic drug metabolism in vitro following administration of ethanol is not due to increased cytochrome P-450 nor to increased NADPH, per se, but appears to result from an increase in the activity of NADPH-cytochrome c reductase.