In order to develop a method for detecting metabolism-mediated embryotoxicity, differentiating embryonic stem (ES) cells were exposed to the well-known proteratogen, cyclophosphamide (CPA). CPA was tested in a scientifically validated embryonic stem-cell test (EST), and in the newly developed reporter-gene assay for developmental cardiotoxicity. Both assays gave false-negative results. Because no metabolic competence (cytochrome P450 [CYP] activity) was found in the ES cells under the selected culture conditions, a simple biotransformation system was combined with the reporter-gene assay. As the metabolic pathway of CPA is well characterised, the genetically engineered mammalian cell line V79, transfected with CYP2B1 cDNA, was selected as a biotransformation system. CYP2B1 is responsible for transforming CPA into teratogenically active metabolites. The supernatants of genetically engineered V79 cells were analysed in the reporter-gene assay for developmental cardiotoxicity. In preliminary experiments, the combined system was able to detect the embryotoxic potential of the proteratogen, CPA.