To evaluate the respective roles of halothane metabolism and hypoxia in rats with halothane hepatotoxicity, experiments were designed with special reference to blood gas. After pretreatment with phenobarbital (80 mg per kg., i.p.) for four consecutive days, rats were exposed to 1.0% halothane under a mildly hypoxic condition (FiO2 = 14%) for 2 hr. Since halothane anesthesia caused significant decrease in PaO2 levels, rats exposed to a highly hypoxic atmosphere (FiO2 = 10%) in which PaO2 levels were comparable to those in the halothane group, served as the control. In the halothane group, marked centrilobular necrosis and elevation of SGPT activity were observed; neither significant histological lesions nor elevation of transaminase activity occurred in the highly hypoxic group. Although phenobarbital treatment did not decrease PaO2 levels during halothane anesthesia, the serum fluoride level, which appears to reflect quantitatively the reductive pathway of halothane metabolism, increased. These results strongly indicate that halothane metabolism rather than hypoxia, per se, plays a major role in development of halothane-induced liver injury in rats.