Metabolism of aflatoxin B1 (AFB1) by subcellular preparations of Aspergillus flavus is least understood. The results reported here have demonstrated for the first time the epoxidation of AFB1 and subsequent conjugation with glutathione (GSH). Microsomes prepared from toxigenic mycelia catalysed [3H]AFB1 to calf thymus DNA to a greater extent (approximately 2-fold) as compared to that of non-toxigenic. The binding of [3H]AFB1 to exogenous and A. flavus nuclear DNA catalyzed by A. flavus microsomes was found to be comparable with that of mammalian extrahepatic tissue such as lung. Addition of phenobarbitone to the growing cultures resulted in 1.5-fold increase in [3H]AFB1-DNA binding mediated by microsomes prepared from either of the two strains. Tolnaftate, an inhibitor of aflatoxin synthesis enhanced the epoxidation rate in a dose-related manner. The binding of [3H]AFB1 to DNA catalyzed by A. flavus microsomes was significantly reduced (50% of control) upon addition of hamster liver cytosol, thereby substantiating the formation of the carcinogen adduct with DNA as reported in mammalian tissues. The metabolite formed by subcellular preparation of A. flavus was found to be AFB1-GSH having Rf value (6.5) similar to that obtained for mammalian liver preparations.