Carbonyl reductase (CBR) catalyzes the reduction of daunorubicin (DN) to its corresponding alcohol, daunorubicinol (DNOL), and changes the pharmacological properties of this cancer chemotherapeutic drug. The DN reductase associated with CBR reduces the C13 methyl ketone group and does not metabolize the quinone ring of DN. Reports comparing DN and DNOL toxicity have resulted in various conclusions depending on the cells tested. Differences in toxicity could be due to variations in several enzymes involved in DN metabolism. In this report, the effects of CBR expression on DN metabolism and cell toxicity were determined by cloning and expressing a human CBR cDNA in DN reductase-deficient myeloid erythroleukemia K562 cells. CBR activity increased 83-fold in the K562-transfected cells and was associated with a 2-3-fold reduction in DN toxicity. Maximum protection occurred at 30 nM DN where 94% of the intracellular DN was converted to DNOL within 2 h. The reduced toxicity was specific for DN. Other CBR substrates such as menadione, phenanthrenequinone, and doxorubicin were equally toxic to both the CBR expresser cells and the control cells under the conditions tested. Our results suggest that high levels of CBR in tumor cells could contribute to drug resistance. The results also suggest that reduction of DN to DNOL protects against DN toxicity by altering interaction of the drug at one or more of the many target sites.