Chlorambucil, a bifunctional alkylating agent and antitumor drug, is a potent teratogen in rodents and possibly teratogenic in humans. Unlike cyclophosphamide, a related bifunctional alkylating agent, chlorambucil is a direct-acting cytotoxic agent. However, several studies indicate that the cytotoxic potential of chlorambucil is enhanced by metabolism of the parent compound. Using day-10 rat embryos cultured in vitro, we have demonstrated that chlorambucil is a direct acting teratogen but that its teratogenicity can be enhanced by the addition of rat liver S-9 preparations to culture medium containing the durg. Our data also suggest that this enhancement is not related to cytochrome P-450 monooxygenases. This conclusion is based upon three lines of evidence. First, enhancement occurs under culture conditions which lack cofactors necessary for cytochrome P-450 monooxygenases. Second, metyrapone, a known inhibitor of cytochrome P-450, did not abolish the enhancement. Third, induction of cytochrome P-450 by two specific inducers of monoxygenase activity had no effect on the observed enhancement. We postulate that the observed enhancement of chlorambucil teratogenicity is related to the β-oxidation of the butyric acid side chain of chlorambucil generating the more cytotoxic (teratogenic) metabolite, phenylacetic acid mustard. Finally, our data indicate that the teratogenic effects elicited by chlorambucil are indistinguishable from those elicited by cyclophosphamide.