The non-parenchymal cells (NPC) of the liver have the potential to significantly influence the formation of reactive intermediates in the liver because of their critical location along the sinusoids where they are the first cells to encounter blood borne xenobiotics. To study the possible role of the NPC in the metabolism of xenobiotics, populations of NPC and parenchymal cells (PC) were prepared from rats and various xenobiotic metabolizing enzyme activities investigated. The specific activity of every enzyme studied was 12 to 1000% higher in the PC than in the NPC populations and the pattern of activities between the 2 populations was remarkably different. The NPC also displayed a more dramatic response to Aroclor 1254 induction of enzyme activities than did the PC. Furthermore, the NPC were capable of forming biologically reactive intermediates which caused cyto- and genotoxicity. From these data we conclude that the NPC provide a distinct contribution to hepatic metabolism of xenobiotics.