Oxidative metabolism of foreign compounds was measured in the intestinal mucosa of male rats. Activities of benzpyrene hydroxylase, p-nitroanisole O-demethylase, and NADPH-cytochrome P-450 reductase and cytochrome P-450 content were 3 to 10 times higher in epithelial cells of the upper villus than in mucosal crypt cells. Villous tip cells of the upper small intestine exhibited much higher cytochrome P-450 content and drug-metabolizing enzyme activity than did tip cells of lower intestinal segments. In rats fed commercial chow diet, cytochrome P-450 content and drug-metabolizing enzyme activity in villous tip cells of duodenal mucosa were higher than in animals fed a semisynthetic diet, but cytochrome b5 and NADPH-cytochrome P-450 reductase were unaffected. On restriction of dietary iron intake, cytochrome P-450 and oxidative enzyme activity fell sharply, but were completely restored in 24 hr by oral iron supplementation, whereas parenteral iron administration was ineffective. These findings suggest that intestinal drug metabolism is localized primarily in the upper villous cells of the proximal intestinal mucosa, that cytochrome P-450 is synthesized in maturing epithelial cells as they migrate from the crypts to the tip of the mucosal villi, and that this process is dependent critically upon absorption of iron from the intestinal lumen.