Rat liver microsomes were shown to catalyze the conjugation of 1-chloro-2,4-dinitrobenzene with glutathione and this activity has been characterized. It cannot be removed from the microsomes by washing or other procedures which release loosely bound material from membranes. The microsomal glutathione S-transferase can be activated up to eight fold by treatment with N-ethylmaleimide. This activation also affects the apparent Km of the enzyme(s) for both glutathione and 1-chloro-2,4-dinitrobenzene. Upon subcellular fractionation of the liver the N-ethylmaleimide-activateable glutathione S-transferase distributes in the same manner as a marker for the endoplasmic reticulum and unlike markers for the other organelles and for the cytoplasm. Treatment of microsomes with proteases revealed that the enzyme is at least partially exposed on the cytoplasmic surface of the endoplasmic reticulum. Finally, three inducers of drug-metabolizing systems-i.e. phenobarbital, methylcholanthrene, and trans-stilbene oxide-all increase the activity of the cytoplasmic glutathione S-transferases, but they do not affect the microsomal activity. These and other considerations indicate that the microsomal glutathione S-transferase(s) is distinct from the cytoplasmic enzymes catalyzing similar reactions. The microsomal enzyme is likely to be involved in drug metabolism and the possibility of activating it through attack on a sulfhydryl group may represent an important physiological response to certain xenobiotics.