Hydroxylation of niflumic acid to 4'-hydroxyniflumic acid and 5-hydroxyniflumic acid by rat liver microsomes from untreated animals or phenobarbital-pretreated animals has been demonstrated. Pretreatment of rats with phenobarbital (50 mg/kg) increased the 4'-hydroxylase activity 53%, whreas the 5-hydroxylase activity was increased 205%. Niflumic acid inhibited of 4'- or 5-hydroxylase was observed with SKF 525-A. WIN 13099 inhibited both hydroxylases noncompetitvely. With freshly prepared microsomes, acetone, at concentrations frozen and aged microsomes, maximum enhancement of 4'-hydroxylase was obtained at 5% acetone; little or no effect on 5-hydroxylase was observed at the same concentration. At 10% acetone, the 4'- and 5-hydroxylases were inhibited 33 and 73% respectively. The data indicate that at least two different enzyme systems are involved in the hydroxylation of niflumic acid by the microsomes of rat liver.