Cytochrome P-450 was prepared from the liver microsomes of cholestyramine-fed rats by solubilisation with the non-ionic detergent Nonidet P42 followed by chromatography on a DEAE-cellulose column and on hydroxyapatite. NADPH--cytochrome P-450 reductase was prepared by a technique of affinity column chromatography using 2',5'ADP Sepharose. 2. The activity of cholesterol 7 alpha-hydroxylase was measured in a reconstituted system of microsomal mixed-function oxidase containing cytochrome P-450 and NADPH--cytochrome P-450 reductase from rat liver plus cholesterol and NADPH. Endogenous cholesterol was largely depleted from the enzyme preparations by the treatment of the microsomes with cold n-butanol/acetone. 3. The reconstituted system of mixed-function oxidase catalysed a highly effective and specific 7 alpha-hydroxylation of cholesterol. The reconstituted system showed a higher activity of cholesterol 7 alpha-hydroxylase than was observed in native liver microsomes. The reconstituted system had an absolute requirement for cytochrome P-450, NADPH--cytochrome P-450 reductase and NADPH. 4. The apparent Km for cholesterol in the reconstituted system was 15 microM and the V was 1.4 nmol 7 alpha-hydroxycholesterol formed min-1 (nmol cytochrome P-450)-1. 5. The reconstituted system also catalysed the 7 alpha-hydroxylation of taurodeoxycholic acid, the 7 alpha-hydroxylation of 26-norcholesterol and to a limited degree the 12 alpha-hydroxylation of cholest-4-ene-3-one-7 alpha-ol. The ability of this reconstituted system to effect these two 7 alpha-hydroxylation reactions and the 12 alpha-hydroxylation reaction was significantly less than the ability of the system to 7 alpha-hydroxylate cholesterol.