Cytochrome P-450 and NADPH-cytochrome P-450 REDUctase, both purified from liver microsomes of phenobarbital-pretreated rabbits, have been incorporated into the membrane of phosphoaditylcholine vesicles by the cholate dialysis method. The reduction of cytochrome P-450 by NADPH in this system is biphasic, consisting of two first-order reactions. The rate constant of the fast phase, in which 80--90% of the total cytochrome is reduced, increases as the molar ratio of the reductase to the cytochrome is increased at a fixed ratio of the cytochrome to phosphatidylcholine, suggesting that the rate-limiting step of the fast phase is the interaction between the reductase and the cytochrome. The rate constant of the fast phase also increases when the amount of phosphatidylcholine, relative to those of the two proteins, is decreased. This latter observation suggests that the interaction between the two proteins is effected by their random collision caused by their lateral mobilities on the plane of the membrane of phosphatidylcholine vesicles. The rate constant of the slow phase as well as the fraction of cytochrome P-450 reducible in the slow phase, on the other hand, remains essentially constant even upon alteration in the ratio of the reductase to the cytochrome or in that of the two proteins to phosphatidylcholine. No satisfactory explanation is as yet available for the cause of the slow-phase reduction of cytochrome P-450. The overall activity of benzphetamine N-demethylation catalyzed by the reconstituted vesicles responds to changes in the composition of the sysTEM IN A SIMILAR WAY TO THE FAST-PHASE REDUCTION OF CYTOCHROME P-450, though the latter is not the rate-limiting step of the overall reaction.