The metabolism of 2-acetylaminofluorene (AAF) as well as the activation of AAF to covalently bound and mutagenic intermediates were studied in isolated rat hepatocytes. The cell system readily formed oxidized, deacetylated, and conjugated AAF metabolites. Pretreatments of animals with the inducer beta-naphthoflavone led to increases in phenolic and conjugated as well as covalently protein-bound products. Addition of 4-nitrophenol, a substrate for conjugation, increased the levels of free phenols and inhibited the formation of water-soluble metabolites. At the same time, the rates of covalent protein binding were decreased. Formation of 9-hydroxy-2-acetylaminofluorene could also be demonstrated. The pathway leading to this alicyclic hydroxylated AAF metabolite was not induced by prior beta-naphthoflavone treatment, nor was it inhibited by 4-nitrophenol addition. The cells converted AAF as well as aminofluorene and 2,4-diaminoanisole to mutagenic intermediates which were released into the incubation medium. 2-Aminofluorene was considerably more mutagenic than was AAF in this system. Addition of microsomes increased the mutagenicity of AAF, but not that of 2-aminofluorene or 2,4-diaminoanisole, presumably by deacetylation of N-hydroxy-2-acetylaminofluorene to N-hydroxy-2-aminofluorene.