The existence of a novel microsomal deacetylase in rat liver catalysing deacetylation of diacetoxy 4-methylcoumarins has been reported. A simple method is outlined for the enzyme assay based upon the quantification of the dihydroxy derivative by measuring the UV absorption of its complex with ADP and Fe3+ at 600 nm. The enzyme can be routinely assayed using 7,8-diacetoxy-4-methylcoumarin (DAMC) as the substrate and demonstrated hyperbolic kinetics and yielded Km and νmax values of 1250 μM and 500 units, respectively. The pH optima was found to be 7.5 for the enzyme. No DAMC deacetylase activity was found in hepatic cytosol and the enzyme activity was not discernible in extrahepatic tissues.