Midazolam (MDZ) is a short-acting benzodiazepine with rapid onset of action, which is metabolized by CYP3A isoenzymes to two hydroxylated metabolites, 1′-hydroxymidazolam and 4-hydroxymidazolam. The drug is also commonly used as a marker of CYP3A activity in the liver microsomes. However, the kinetics of CYP3A-mediated hydroxylation of MDZ in the brain, which contains much lower CYP content than the liver, have not been reported. In this study, UPLC-MS/MS and metabolic incubation methods were developed and validated for simultaneous measurement of low concentrations of both hydroxylated metabolites of MDZ in brain microsomes. Different concentrations of MDZ (1–500 µM) were incubated with rat brain microsomes (6.25 µg) and NADPH over a period of 10 min. After precipitation of the microsomal proteins with acetonitrile, which contained individual isotope-labeled internal standards for each metabolite, the analytes were separated on a C18 UPLC column and detected by a tandem mass spectrometer. Accurate quantitation of MDZ metabolism in the brain microsomes presented several challenges unique to this tissue, which were resolved. The optimized method showed validation results in accordance with the FDA acceptance criteria, with a linearity ranging from 1 to 100 nM and a lower limit of quantitation of 0.4 pg on the column for each of the two metabolites. The method was successfully used to determine the Michaelis-Menten (MM) kinetics of MDZ 1′- and 4-hydroxylase activities in rat brain microsomes (n = 5) for the first time. The 4-hydroxylated metabolite had 2.4 fold higher maximum velocity (p < 0.01) and 1.9 fold higher (p < 0.05) MM constant values than the 1′-hydroxylated metabolite. However, intrinsic clearance values of the two metabolites were similar. The optimized analytical and metabolic incubation methods reported here may be used to study the effects of various pathophysiological and pharmacological factors on the CYP3A-mediated metabolism of MDZ in the brain.