Catalase-bound NADPH both prevents and reverses the accumulation of inactive bovine liver catalase peroxide compound II generated by 'endogenous' donors under conditions of steady H2O2 formation without reacting rapidly with either compound I or compound II. It thus differs both from classical 2-electron donors of the ethanol type, and from 1-electron donors of the ferrocyanide/phenol type. NADPH also inhibits compound II formation induced by the exogenous one-electron donor ferrocyanide. A catalase reaction scheme is proposed in which the initial formation of compound II from compound I involves production of a neighbouring radical species. NADPH blocks the final formation of stable compound II by reacting as a 2-electron donor to compound II and to this free radical. The proposed behaviour resembles that of labile free radicals formed in cytochrome c peroxidase and myoglobin. Such radical migration patterns within haem enzymes are increasingly common motifs.