Fluoride release and covalent binding of halothane metabolites were studied in rats pretreated with phenobarbital and anesthestized with halothane in the presence of high (40 per cent) and low (7 per cent) oxygen tensions. The purpose of producing hypoxia was to promote the reductive path ways involved in the metabolism of halothane. Halothane anesthesia under hypoxic conditions caused a significant elevation in the plasma fluoride concentration. There was also a greater than three-fold increase in covalent binding of14C-halothane metabolites to microsomal lipids in hypoxic rats. The lipid/protein binding ratio in control animals averaged 0.76, while hypoxic animals had a binding ratio of 3.24. The findings demonstrate that de-fluorination of halothane does occur during hypoxic conditions. It is hypothesized that the products produced by this reductive metabolic pathway are also potentially more hepatotoxic than the oxidative metabolites, based upon the increased covalent binding of halothane metabolites under hypoxic conditions.