Rat liver microsomes catalyzed the biotransformation of the clinically important nitrosourea anticancer agents 1-(2-chloroethyl)-3-(trans-4-methyl-cyclohexyl)-1-nitrosourea (MeCCNU) and 1-(2-chloroethyl)-3-cyclohexyl-1-nitrosourea (CCNU) to alkylating metabolites that bound covalently to microsomal protein and to DNA. The enzyme-mediated microsomal alkylation required NADPH and oxygen and was inhibited by carbon monoxide, indicating the participation of a cytochrome P-450-dependent monooxygenase. Additional studies with inhibitors such as piperonyl butoxide and with the inducers 3-methylcholanthrene and phenobarbital were consistent with this view. In contrast to these observations on the formation of alkylating metabolites, carbamylation reactions were not affected significantly by microsomal metabolism. Reduced glutathione, cysteine or N-acetylcysteine decreased the microsomal alkylation by MeCCNU and produced a corresponding increase in the formation of polar metabolites that was resolved by HPLC as three distinct N-acetylcysteine-MeCCNU adducts. The addition of semicarbazide to the reaction decreased microsomal alkylation by 30%, indicating that the formation of the alkylating species may proceed via an aldehyde intermediate. Renal microsomes were not found to catalyze the alkylation reaction. Moreover, MeCCNU inhibited the renal slice accumulation of p-aminohippuric acid only in the presence of liver microsomes and NADPH, suggesting that a liver metabolite may be responsible for the renal toxicity of the parent nitrosourea.