The substrate specificity of the steroid sulfate-hydroxylating activity in microsomes from human fetal liver has been investigated. Twelve different C18, C19, C21, and C27 steroid sulfates and the corresponding free steroids were used as substrates. The introduction of a sulfate group on the steroid substrate was found to have two principal effects. (1) The hydrophilic sulfate group directs the steroid molecule so that it only interacts with the active site of cytochrome P-450 with its non-sulfurylated, hydrophobic end. (2) The sulfate group interacts with the enzyme surface resulting in exposure of a slightly different part of the hydrophobic end of the substrate to the active site of cytochrome P-450 than when the same end of the free steroid is exposed to the active site of the enzyme. As a consequence of these two effects of the sulfate group, the "steroid sulfate pathway" of steroid hydroxylations generally differs considerably from the "free steroid pathway," both from a qualitative and a quantitative aspect. This difference was found to be most pronounced with estrogens: whereas estradiol was not hydroxylated by human fetal liver microsomal preparations, estradiol 3-sulfate was both 15-alpha- and 16-alpha-hydroxylated. Thus, for certain steroids, sulfurylation is a prerequisite for further metabolism by microsomal hydroxylase systems. These results indicate the presence in human fetal liver microsomes of a multipotent, highly unspecific, hydrophobic "bulk" of cytochrome P-450. The existence of this hydroxylase system which efficiently hydroxylates steroid sulfates is probably of great physiological importance as a detoxifying mechansim in the human fetus.