Abstract The heat-stable factor required for fatty acid, hydrocarbon, and drug hydroxylation in a reconstituted liver microsomal enzyme system containing hemoprotein P-450 has been identified as phosphatidylcholine. Synthetically prepared dioleoylglyceryl-3-phosphorylcholine was fully active when substituted for the microsomal factor, as judged by the rate of laurate, hexane, octane, ethylmorphine, or benzphetamine hydroxylation in the presence of TPNH, oxygen, hemoprotein P-450, and TPNH-hemoprotein P-450 reductase. Various acyl derivatives of glyceryl-3-phosphorylcholine showed, at their optimal concentrations, the following increasing order of activity with benzphetamine as the substrate: distearoyl; a mixture of 1-monopalmitoyl and 1-monostearoyl; dipalmitoyl; dioleoyl; and a mixture of dilauroyl and monolauroyl. Electron transfer from TPNH to hemoprotein P-450, as determined from the carbon monoxide reduced difference spectrum under anaerobic conditions, was completely dependent upon the presence of microsomal lipid. Stopped flow measurements showed that the rate of electron transfer was biphasic in the presence of the lipid, with a rapid phase largely completed in less than 1 sec and having a first order rate constant of about 100 min-1, followed by a slow phase having a first order rate constant of about 6 min-1, but only the slow rate could be detected in the absence of the lipid. Under similar conditions, but with air as the gas phase, the turnover number (moles of benzphetamine hydroxylated per mole of hemoprotein P-450) was 22 min-1. These results show that the lipid is essential for the enzymatic reduction of hemoprotein P-450 and that only the rapid phase of the reaction is adequate to support the observed rate of substrate hydroxylation.