In this study we have investigated the mechanism of the processing of trifluoroacetylated liver microsomal protein antigens associated with halothane hepatitis to learn how the immune system might come in contact with these proteins to form antibodies directed against them. Rats were treated with halothane and parenchymal (PC) and non-parenchymal cells (NPC) were isolated 16 hours later. Immunoblotting of the cell lysates with antisera directed against the trifluoroacetyl hapten showed the presence of high levels of trifluoroacetylated proteins in parenchymal cells, whereas none of these proteins were detected in endothelial or Kupffer cells that were isolated by centrifugal elutriation. The half-lives of 100-, 82-, 80-, 63-, 59-, 58-, and 57-kd trifluoroacetylated and native carrier proteins of the trifluoroacetyl hapten in cultures of rat primary parenchymal cells were approximately 1 day. The turnovers of all of these trifluoroacetylated proteins, except for that of the trifluoroacetylated 100-kd protein, were inhibited by treatment of the cells with ammonium chloride, leupeptin, 4-(2-aminoethyl)-benzenesulfonyl fluoride, or 3-methyl-adenine (3-MA). These results indicate that, in liver, the major source of the formation of trifluoroacetylated antigens associated with halothane hepatitis is the parenchymal cells, It appears that most of the trifluoroacetylated antigens and possibly the native carrier protein of the trifluoroacetyl haptens are transferred from the endoplasmic reticulum (ER) to an acidic compartment of PCs, where they are enzymatically degraded. The processing of the trifluoroacetylated proteins by this pathway may be a protective mechanism that prevents these covalently altered proteins from inducing an antibody response in most patients who are administered halothane.