The mechanisms responsible for ethanol-mediated teratogenesis have not been resolved. However, possible etiologies include the local formation of the teratogen acetaldehyde or oxygen radicals by fetal ethanol-oxidizing enzymes. As alcohol dehydrogenases are expressed at very low concentrations in human embryonic tissues, the ethanol-inducible P450 enzyme, CYP2E1, could be the sole catalyst of fetal ethanol oxidation. With this in mind, we examined the expression of this P450 in liver samples from fetuses ranging in gestational age from 16 to 24 weeks. Immunoblot analysis of fetal liver microsomes revealed the presence of a protein immunoreactive with CYP2E1 antibodies that exhibited a slightly lower molecular weight than that found in adult liver samples. Embryonic CYP2E1 expression was further confirmed by the reverse transcriptase reaction with RNA from a 19-week gestational fetal liver used as template. Catalytic capabilities of human fetal microsomes were assessed by measurement of the rate of ethanol oxidation to acetaldehyde, which were 12-27% of those exhibited by adult liver microsomes. Immunoinhibition studies with CYP2E1 antibodies revealed that the corresponding antigen was the major catalyst of this reaction in both fetal and adult tissues. We then assessed whether embryonic CYP2E1 was, like the adult enzyme, inducible by xenobiotics. Treatment of primary fetal hepatocyte cultures with either ethanol or clofibrate demonstrated a 2-fold increase in CYP2E1 levels compared with untreated cells. Collectively, our results indicate that CYP2E1 is present in human fetal liver, that the enzyme is functionally similar to CYP2E1 from adults, and that fetal hepatocyte CYP2E1 is inducible in culture by xenobiotics, including ethanol. Because fetal CYP2E1 mediates ethanol metabolism, the enzyme may play a pivotal role in the local production of acetaldehyde and free radicals, both of which have potential deleterious effects on the developing fetus.