Phenacetin was withdrawn from the market because it caused renal failure in some patients. Many reports indicated that the nephrotoxicity of phenacetin is associated with the hydrolyzed metabolite, p-phenetidine. Acetaminophen (APAP), the major metabolite of phenacetin, is also hydrolyzed to p-aminophenol, which is a nephrotoxicant. However, APAP is safely prescribed if used in normal therapeutic doses. This background prompted us to investigate the difference between phenacetin and APAP hydrolase activities in human liver. In this study, we found that phenacetin is efficiently hydrolyzed in human liver microsomes (HLM) [CL(int) 1.08 +/- 0.02 microl/(min . mg)], whereas APAP is hardly hydrolyzed [0.02 +/- 0.00 microl/(min . mg)]. To identify the esterase involved in their hydrolysis, the activities were measured using recombinant human carboxylesterase (CES) 1A1, CES2, and arylacetamide deacetylase (AADAC). Among these, AADAC showed a K(m) value (1.82 +/- 0.02 mM) similar to that of HLM (3.30 +/- 0.16 mM) and the highest activity [V(max) 6.03 +/- 0.14 nmol/(min . mg)]. In contrast, APAP was poorly hydrolyzed by the three esterases. The large contribution of AADAC to phenacetin hydrolysis was demonstrated by the prediction with a relative activity factor. In addition, the phenacetin hydrolase activity by AADAC was activated by flutamide (5-fold) as well as that in HLM (4-fold), and the activity in HLM was potently inhibited by eserine, a strong inhibitor of AADAC. In conclusion, we found that AADAC is the principal enzyme responsible for the phenacetin hydrolysis, and the difference of hydrolase activity between phenacetin and APAP is largely due to the substrate specificity of AADAC.