The conversion of hemoglobin to bilirubin IXalpha in vivo probably proceeds via alpha-hydroxyheme to carbon monoxide and biliverdin-iron complex; after hydrolysis, biliverdin IXalpha is liberated from the iron complex and reduced enzymatically to bilirubin IXalpha. For these reactions molecular oxygen, NADPH and a functioning microsomal electron transport system are needed to generate a reaction radical to transform the heme at the alpha-bridge to alpha-hydroxyheme. After that the reaction proceeds spontaneously. During this reaction sequence heme is readily bound to an insoluble and substrate-inducible protein, which behaves as a stereospecific oxidase. The crucial point in all likelihood is the nature of this heme-binding protein. It seems to be a large protein molecule having a molecular weight in excess of 200,000 and located within the membrane of the endoplasmic reticulum. The conversion of heme to bilirubin has thus some characteristics of nonenzymatic coupled oxidation and, on the other hand, of mixed-function oxidations catalyzed by cytochrome P-450. The exact nature and the regulation of this process, however, appears to be quite different from that manifested with drugs and steroids.