Coumarin was previously found to cause tissue-selective toxicity in the olfactory mucosa (OM) of rats and mice, with rats being the more sensitive species. The aim of this study was to explore the role of target tissue biotransformation in OM-selective toxicity and the metabolic basis of the species differences in coumarin toxicity. At least six coumarin metabolites were detected in OM microsomal reactions, with o-hydroxyphenylacetaldehyde (o-HPA) being the most abundant. Formation of o-HPA was inhibited by reduced glutathione, confirming its origin from a reactive intermediate. There were significant differences in the rates and metabolite profiles of coumarin metabolism in the livers of Wistar rats and C57BL/6 mice. The rates of metabolic activation of coumarin, as indicated by the formation of o-HPA, were comparable in OM microsomes of the two species but about 25- and 3-fold higher in OM than in liver microsomes of rats and mice, respectively. Thus, target tissue activation seems to play an important role in the tissue-selective toxicity, whereas differences in the rates of hepatic metabolism may be responsible for the species difference in olfactory toxicity. Purified, heterologously expressed mouse CYP2A5 and CYP2G1 produced 7-hydroxycoumarin and o-HPA as the predominant products, respectively. Kinetic analysis and immunoinhibition studies indicated that the OM-specific CYP2G1 plays the major role in metabolic activation of coumarin. Furthermore, of 13 human cytochrome P-450s (P-450s) examined, five (CYP1A1, CYP1A2, CYP2B6, CYP2E1, and CYP3A4) were active in the metabolic activation of coumarin, suggesting a potential risk of coumarin toxicity in humans.