Metabolism of drugs by the drug-metabolizing enzyme system usually results in the formation of less toxic substances that are readily excreted. A major advance in toxicology, however, has been the observation that the same enzyme system can also activate innocuous drugs into reactive and highly toxic metabolites. Depending on their chemical nature, these metabolites either covalently bind to cellular macromolecules, give rise to toxic oxygen species, or react with membrane lipids to form lipid peroxides. Glutathione, vitamin E and possibly other antioxidants play an important role in protecting the cell from these toxic species. Alteration of a cellular protein by a chemically reactive metabolite may lead to the formation of an antigen and result in an allergic reaction with not only hepatic, but also systemic, manifestations. The formation of toxic metabolites has been postulated in the hepatotoxicity of acetaminophen, isoniazid, halothane, erythromycin and valproic acid. With other drugs, altered pharmacokinetics in the poor metabolizer phenotype and elderly patients may predispose to toxic reactions.