N,N-Dimethyl-4-aminoazobenzene (DAB), an azo dye carcinogen, is N-demethylated and 4'-hydroxylated by rat liver microsomes. Addition of hepatic cytosol to the microsomal system stimulated both pathways. This occurred in the presence of added NADPH or an NADPH-generating system. Cytosol was effective only when present prior to addition of substrate; no stimulation was seen when added after the reaction had begun. This suggested a direct effect on the microsomes rather than a chemical interaction with one or more metabolic intermediates of DAB. The degree of stimulation was somewhat different when using microsomes from phenobarbital- or beta-naphthoflavone-treated animals, implying a selectivity of the cytosolic effect for various isozymes of cytochrome P-450. Some loss of stimulatory activity occurred with dialysis. Activity was restored by adding back glutathione (GSH) which can stimulate DAB metabolism even in the absence of cytosol. DAB metabolism is also stimulated by EDTA. Although both EDTA and cytosol inhibit lipid peroxidation, cytosol stimulated DAB metabolism even in the presence of EDTA. Therefore, suppression of lipid peroxidation does not explain satisfactorily the cytosolic effect. Separation of cytosolic proteins by gel filtration revealed a factor which inhibits N-demethylation but not 4'-hydroxylation of DAB. Heating at 100 degrees partially inactivated the stimulatory activity. However, inhibitory activity was less susceptible to heat inactivation than was stimulatory activity. These results indicate that, in the whole cell, microsomal metabolism of xenobiotics is regulated to an appreciable extent by macromolecular cytosolic substances.