Chronic ethanol consumption causes increased oxidative damage in the liver. Induction of CYP2E1 is one pathway involved in how ethanol produces oxidative stress. Ethanol can cause protein accumulation, decreased proteolysis, and decreased proteasome activity. The objective of this study was to investigate the effect of inhibition of the proteasome activity on CYP2E1-dependent toxicity. HepG2 cells over-expressing CYP2E1 (E47 cells) were treated with arachidonic acid (AA) plus iron, agents important in development of alcoholic liver injury and which are toxic to E47 cells by a mechanism dependent on CYP2E1, oxidative stress, and lipid peroxidation. Addition of various proteasome inhibitors was associated with significant potentiation of the loss of cell viability caused by AA plus iron. Potentiation of toxicity was associated with increased oxidative damage as reflected by an increase in lipid peroxidation and accumulation of oxidized and nitrated proteins in E47 cells and an enhanced decline in mitochondrial membrane potential. Antioxidants prevented the loss of viability and the potentiation of this loss of viability by proteasome inhibition. CYP2E1 levels were elevated about 3-fold by the proteasome inhibitors. Inhibition of proteasome activity also potentiated toxicity of AA alone and toxicity after treatment to remove glutathione (GSH). Similar results were found in hepatocytes from pyrazole-treated rats with high levels of CYP2E 1. In conclusion, proteasome activity plays an important role in modulating CYP2E1-mediated toxicity in HepG2 cells by regulating CYP2E1 levels and by removal of oxidized proteins. Such interactions may be important in CYP2E1-catalyzed toxicity of hepatotoxins and in alcohol-induced liver injury.