Cytochrome P450 2E1 (CYP2E1) is constitutively expressed in liver and many other tissues. CYP2E1 is effectively induced in the liver by a diverse set of chemicals having various structures. The enzyme constitutes the only P450 form that is strongly induced by ethanol. CYP2E1 metabolizes a wide array of chemicals with different structures, in particular small and hydrophobic compounds, including potential carcinogens. In addition, CYP2E1 has a unique capacity to reduce dioxygen to reactive oxy radicals that might initiate membranous lipid peroxidation, yielding products, mainly aldehydes, which activate immune cells for cytokine production and Ito cells for collagen formation. CYP2E1 mediated formation of reactive lipid peroxidation products and alpha-hydroxyethyl radicals gives rise to protein adduct formation, some of which can cause autoimmune reactions. The regulation of CYP2E1 is unusually complicated and is exerted at several different cellular levels. CYP2E1 has received much attention, mainly because of its putative importance in the activation of chemicals to cytotoxic or carcinogenic products and its potential role in ethanol-induced hepatotoxicity.