The metabolites of environmental chemicals play key roles in carcinogenesis. Areca nut is strongly associated with the development of oral potentially malignant disorders (OPMD) or cancer. The main alkaloid in the areca nut is arecoline, which is highly cytotoxic and genotoxic. Arecoline N-oxide, a metabolite of areca nut alkaloids, which has been identified in animal urine, has been shown to induce mutagenicity in bacteria. In this study, it was found that its protein adduct could be detected in oral keratinocytes treated with areca nut extract. Increased collagen expression and severity of squamous hyperplasia were observed in arecoline N-oxide treated mice. In cultured oral fibroblasts, arecoline N-oxide showed stronger effects on the increase of fibrotic related genes including TGF-beta1, S100A4, MMP-9, IL-6, and fibronectin and a decrease of E-cadherin as compared with arecoline. Finally, arecoline N-oxide stimulation effectively increased the DNA damage marker, gamma-H2A.X, both in vitro and in vivo. Taken together, these results indicate that arecoline N-oxide shows a high potential for the induction of OPMD.