Pyrrolizidine alkaloids (PAs) are among the most significant groups of phytotoxins present in more than 6000 plants in the world. Hepatotoxic retronecine-type PAs and their corresponding N-oxides usually co-exist in plants. Although PA-induced hepatotoxicity is known for a long time and has been extensively studied, the toxicity of PA N-oxide is rarely investigated. Recently, we reported PA N-oxide-induced hepatotoxicity in humans and rodents and also suggested the association of such toxicity with metabolic conversion of PA N-oxides to the corresponding toxic PAs. However, the detailed biochemical mechanism of PA N-oxide-induced hepatotoxicity is largely unknown. The present study investigated biotransformation of four representative cyclic retronecine-type PA N-oxides to their corresponding PAs in both gastrointestinal tract and liver. The results demonstrated that biotransformation of PA N-oxides to PAs was mediated by both intestinal microbiota and hepatic cytochrome P450 monooxygenases (CYPs), in particular CYP1A2 and CYP2D6. Subsequently, the formed PAs were metabolically activated predominantly by hepatic CYPs to form reactive metabolites exerting hepatotoxicity. Our findings delineated, for the first time, that the metabolism-mediated mechanism of PA N-oxide intoxication involved metabolic reduction of PA N-oxides to their corresponding PAs in both intestine and liver followed by oxidative bioactivation of the resultant PAs in the liver to generate reactive metabolites which interact with cellular proteins leading to hepatotoxicity. In addition, our results raised a public concern and also encouraged further investigations on potentially remarkable variations in PA N-oxide-induced hepatotoxicity caused by significantly altered intestinal microbiota due to individual differences in diets, life styles, and medications.