When Day 10 rat embryos were grown in culture containing cyclophosphamide, an hepatic microsomal fraction (S-9), and cofactors for monooxygenation, they developed characteristic malformations. When a fixed volume of CP was added to cultures the number of malformed embryos was increased and their growth decreased dependent upon the S-9 concentration. In one group of experiments S-9 was prepared from animals which had been pretreated with either phenobarbital (PB) or 3-methylcholanthrene (MCA). All embryos cultured with CP by S-9 from animals pretreated with polychlorinated biphenyls (Aroclor 1254) microliter/ml) was used. No malformations were seen under the same conditions when MCA-induced S-9 (0.25-12.5 microliter/ml) was substituted. The teratogenic activation of CP by S-9 from animals pretreated with polychlorinated biphenyls (Aroclor 1254) was inhibited in vitro by the addition of either metyrapone or carbon monoxide. Embryos which were exposed to CP (25 mg/kg) in vivo on Day 10 were indistinguishable from embryos treated in vitro. All developed characteristic defects and had significant decreases in growth parameters when compared to control litters receiving only vehicle. No histological differences were seen between embryos treated in vivo or in vitro. These data provide further evidence that the teratogenicity of CP is dependent upon one or more maternal P450 monooxygenase systems.