Studies by several investigators have confirmed that the microsomal fraction of mammalian liver oxidizes ethanol to acetaldehyde in a reaction that requires NADPH and oxygen. Efforts to identify the enzymes involved have produced conflicting opinions of the reaction mechanism, however. Initially, the microsomal mixed function oxidase system was assumed to be capable of oxidizing ethanol in a mechanism that did not involve either alcohol dehydrogenase or catalase. Later evidence suggested that the oxidative enzyme was, in fact, catalase, a contaminant of microsomal preparations and that the mixed function oxidase system merely furnished hydrogen peroxide to the reaction. Much current research supports the latter interpretation. Other workers provide evidence that favors a system in which catalase does not participate. Attempts to define the reaction process have involved studies with catalase inhibitors, kinetic studies of the different reaction systems, and physical separation of catalase from the microsomal components. Questions of the mechanism of microsomal ethanol oxidation may prove to be purely academic, however. Efforts to prove that the system has significant in vivo activity generally have not been successful.