The alkylating agent BCNU [1,3-bis(2-chloroethyl)-1-nitrosourea] can be inactivated through denitrosation reactions catalyzed by both cytosolic and microsomal enzymes. While previous studies have identified a class mu glutathione S-transferase [rat transferase 4-4 (Yb2)] as a major catalyst of the cytosolic denitrosation reaction, the enzymatic catalysts of BCNU denitrosation in microsomal membranes have not been identified. In the present study, both NADPH and glutathione (GSH) were found to support BCNU denitrosation catalyzed by isolated rat liver microsomes. Treatment of rats with the microsomal enzyme inducers phenobarbital and dexamethasone increased NADPH-dependent liver microsomal BCNU denitrosation up to fivefold without major effect on the GSH-dependent denitrosation activity. Although the NADPH-dependent activity was fully inhibited by antibody to NADPH-P450 reductase, purified NADPH-P450 reductase catalyzed BCNU denitrosation at rates that could only account for approximately 2-3% of the microsomal activity. Other experiments, including selective inhibition of NADPH-dependent microsomal BCNU denitrosation by chemical and antibody inhibitors of cytochrome P450, competitive inhibition of P450-catalyzed cyclophosphamide and ifosfamide activation by BCNU, and reconstitution of the denitrosation reaction by purified P450 enzyme 2B1 (major phenobarbital-inducible P450 form), established an important role for cytochrome P450 in BCNU denitrosation. By contrast, GSH-dependent microsomal BCNU denitrosation was unaffected by cytochrome P450 inhibitors, but was inhibited, with varying degrees of selectivity, by the microsomal glutathione S-transferase inhibitors ethacrynic acid, bromosulfophthalein, and indomethacin. These studies establish that BCNU inactivation can be catalyzed by two independent microsomal enzyme systems and suggest that therapeutically useful improvements in BCNU antitumor activity might be achieved through differential inhibition of these enzyme systems in tumor as compared to extratumoral sites.