Catalase (H2O2:H2O2 oxidoreductase, EC 1.11.1.6) is of historical interest for having been the subject of some of the earliest investigations of enzymes. A feature of catalase that has been poorly understood for several decades, however, is the mechanism by which catalase remains active in the presence of its own substrate, hydrogen peroxide. We reported recently that catalase contains tightly bound NADPH. The present study with bovine and human catalase revealed that NADPH both prevents and reverses the accumulation of compound II, an inactive form of catalase that is generated slowly when catalase is exposed to hydrogen peroxide. Since the effect of NADPH occurs even at NADPH concentrations below 0.1 microM, the protective mechanism is likely to operate in vivo. This discovery of the role of catalase-bound NADPH brings a unity to the concept of two different mechanisms for disposing of hydrogen peroxide (catalase and the glutathione reductase/peroxidase pathway) by revealing that both mechanisms are dependent on NADPH.