Cytochrome P450 is part of an electron transport chain found in the endoplasmic reticulum (ER), with its catalytic function requiring interactions with NADPH-cytochrome P450 reductase (CPR). The goals of this study were to examine how the P450 system proteins are organized in the membrane and to determine whether they are distributed in detergent-resistant lipid microdomains (DRM). Isolated liver microsomes from untreated rabbits were treated with 1% Brij 98, and DRMs were isolated via sucrose gradient centrifugation. Lipid analysis showed that DRM fractions were enriched in cholesterol and sphingomyelin, similar to that found with plasma membrane DRMs. Approximately 73% of CYP1A2 and 68% of CPR resided in DRM fractions, compared with only 33% of total ER proteins. These DRMs were found to be cholesterol-dependent: CPR and CYP1A2 migrated to the more dense regions of the sucrose gradient after cholesterol depletion. CYP1A2 function was studied in three purified lipid vesicles consisting of 1) phosphatidylcholine (V-PC), 2) lipids with a composition similar to ER lipids (V-ER), and 3) lipids with a composition similar to the DRM fractions (V-DRM). Each system showed similar substrate binding characteristics. However, when the association between CPR and CYP1A2 was measured, V-ER and V-DRM liposomes produced lower apparent K(m) values compared with V-PC without any significant change in V(max). These findings suggest that CYP1A2 and CPR reside in ER-DRMs and that the unique lipid components of these domains enhance CYP1A2 substrate metabolism through greater efficiency in CPR-CYP1A2 binding.