Hepatic microsomal biotransformation of phenol to hydroquinone and catechol has been investigated with special reference to the covalent binding to microsomal protein of reactive metabolites formed during microsomal metabolism of phenol. Incubation of [14C]phenol with microsomes from phenobarbital-treated rat liver in the presence of an NADPH-generating system resulted in the formation of hydroquinone and catechol in the ratio of 20:1. No significant formation of 1,2,4-benzenetriol was observed. The biotransformation of phenol to both hydroquinone and catechol required NADPH and molecular oxygen. NADH was much less effective than NADPH as an electron donor and exhibited no significant synergistic effect when used together with NADPH. The biotransformation was inhibited by typical cytochrome P-450 inhibitors such as carbon monoxide, SKF 525-A, and metyrapone. These results indicated the involvement of cytochrome P-450 in the microsomal hydroxylation of phenol at both the ortho- and para-positions. Covalent binding of radioactivity to microsomal protein was observed when [14C]phenol was incubated with rat liver microsomes in the presence of an NADPH-generating system. The covalent binding was also found to require NADPH and molecular oxygen. Inclusion of cytochrome P-450 inhibitors in the incubation mixture resulted in a decrease in the covalent binding. These results indicated that at least one step in the metabolic activation of phenol to the metabolites responsible for covalent binding to microsomal protein was mediated by cytochrome P-450. Inclusion of N-acetylcysteine in the incubation mixture resulted in the complete inhibition of the covalent binding of radioactivity derived from [14C]phenol to microsomal protein, and there was a concomitant formation of N-acetylcysteine adducts of hydroquinone and catechol. These results indicated that hydroquinone and catechol were both precursors to reactive metabolites responsible for the covalent binding.