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1. Oestradiol hydroxylase activity, as measured by the formation of water-soluble products, was significantly higher in the smooth endoplasmic reticulum of rat liver than in the rough membrane. 2. The isolated membrane fractions retained their activity for at least 6 months if stored at -30 degrees C and were more stable in tris-HCl than in sodium phosphate buffer. 3. The stability of the oestradiol-hydroxylating system was inversely related to lipid peroxidation and was decreased by phospholipases and deoxycholate, which damage the reticular membranes. Ribonuclease had no effect on this system. 4. Added polyribosomes did not influence the metabolism of oestradiol in the smooth membranes but some inhibition in the yield of water-soluble metabolites was produced by corticosterone. 5. The effect of spermine on microsomal hydroxylation was investigated. It is proposed that this polyamine acts either by direct activation of the enzyme complex or by inhibition of the lipid peroxidase pathway in a linked system rather than by stabilization of the reticular membranes.