Squalene epoxidation catalyzed by rat liver microsomes requires oxygen NADPH, and the 105,000 x g supernatant (S105). The supernatant can be replaced by a partially purified S105 protein (SPF) and phospholipids (Tai, H., and Bloch, K. (1972) J. Biol. Chem. 247, 3767). When washed microsomes are preincubated anaerobically with [14C]squalene and S105 without NADPH, followed by centrifugation and washing to remove the unbound squalene and S105, epoxidation in the presence of O2 and NADPH occurs subsequently at the same rate as in direct assays containing all required components from the start. Partially purified SPF (65-fold) shows the same effect. Washed microsomes preincubated anaerobically with squalene alone, or with bovine serum albumin instead of S105, also take up large amounts of squalene, but the squalene so incorporated is only poorly converted to epoxide. The epoxidation of endogenous squalene formed in liver homogenates from [14C]mevalonate is also stimulated by S105. The incorporation of squalene into microsomes is temperature dependent. 2,3-Oxidosqualene-lanosterol cyclase (cyclase) also requires S105 for optimal activity. It is suggested that the S105 protein acts internally within the microsomal membrane system facilitating the access of substrate to specific enzyme sites.