To establish direct linkage between the ethanol-inducible cytochrome P450, CYP2E1, ethanol hepatotoxicity, and lipid peroxidation, a HepG2 cell line which expresses human CYP2E1 was established by retroviral infection. Ethanol produced a time- and concentration-dependent cytotoxicity to HepG2 cells expressing the CYP2E1 but not to control cells. The ethanol toxicity was prevented by inhibitors of CYP2E1 and antioxidants. In a similar manner, addition of a polyunsaturated fatty acid such as arachidonic acid produced toxicity to the cells expressing CYP2E1 but not the control cells. Toxicity was associated with enhanced lipid peroxidation and was prevented by antioxidants. The ethanol and arachidonic acid toxicity was apoptotic in nature and was associated with activation of Caspases I and III. The toxicity and apoptosis could be prevented by peptide inhibitors of ICE and by transfection with a plasmid containing the cDNA for human Bcl-2. These results show that this HepG2 cell model can be used to establish a CYP2E1-dependent ethanol hepatotoxicity system, and that induction of a state oxidative stress appears to play a central role in the CYP2E1-dependent apoptosis and cytotoxicity.