Carbonyl reductase activity for a novel hypnotic, N3-phenacyluridine, was mainly localized in the cytosol fraction of rabbit liver. The enzyme (N3-phenacyluridine reductase) which catalyzes the reduction of N3-phenacyluridine to N3-alpha-hydroxy-beta-phenethyluridine was purified from the cytosolic fraction of rabbit liver by various chromatographic techniques (DEAE-Sephacel, Red Sepharose CL-6B and hydroxylapatite). N3-Phenacyluridine reductase had a minimum molecular weight of 39kDa on sodium dodecyl sulfate polyacrylamide gel electrophoresis. This enzyme required reduced nicotinamide adenine dinucleotide phosphate (NADPH) as a cofactor and its optimal pH was 7.5. Flavonoids (quercetin and quercitrin) were potent inhibitors of the enzyme, but pyrazole or barbital had little effect. The apparent Km and Vmax values of the enzyme for the reduction of N3-phenacyluridine were 0.32 mM and 8.7 units/mg protein, respectively. A variety of carbonyl compounds, including N3-phenacyluridine, were effectively reduced by the enzyme. However, the enzyme purified from rabbit liver differs in several respects from known carbonyl reductases in rabbit liver.