In view of the presence of adventitious catalase in isolated microsomes, and the requirement for H2O2, it has been suggested that NADPH-dependent oxidation of methanol by rat liver microsomes was mediated exclusively by the peroxidatic activity of catalase. However, H2O2 may also serve as a precursor of the hydroxyl radical, and methanol reacts with hydroxyl radicals to produce formaldehyde. Inhibition of H2O2 production should therefore decrease methanol oxidation by either a hydroxyl radical-dependent pathway or a catalase-dependent pathway. To attempt to clarify some of the controversies concerning the roles of H2O2 and catalase in the microsomal pathway of oxidation of short chain alcohols, studies were carried out to determine the nature of the pathway responsible for methanol oxidation by isolated microsomes. In the absence of the catalase inhibitor azide, methanol may be oxidized primarily by the peroxidatic activity of catalase since there was little effect on methanol oxidation by competing hydroxyl radical scavengers. Azide, which inhibited catalase activity > 95%, inhibited NADPH-dependent oxidation of methanol by 30-50%. The azide-insensitive (catalase-independent) pathway of methanol oxidation was inhibited by scavengers of hydroxyl radicals. The inhibition of the scavengers reflected the rate constant for interaction with hydroxyl radicals and was greater at lower concentrations of methanol than at higher concentrations, suggesting competition between the scavengers and methanol. The addition of H2O2 stimulated the oxidation of methanol in the presence of azide; H2O2 may serve as a precursor of the hydroxyl radical. Iron-EDTA, which is known to increase hydroxyl radical production, stimulated the oxidation of methanol in the absence and presence of azide. The stimulation by iron-EDTA was blocked by the competing hydroxyl radical scavengers even in the absence of azide, suggesting that the added iron-EDTA competes favorably with microsomal catalase for H2O2 to produce hydroxyl radicals (or a species with the oxidizing power of the hydroxyl radical). These results suggest that in microsomes, depending on the absence or presence of azide, methanol may be oxidized by two primary pathways, one involving the peroxidatic activity of catalase, and the other in which hydroxyl radicals, generated from microsomal electron transfer, play a role. In view of the crucial role played by H2O2 in both pathways, inhibition of H2O2 formation should not be interpreted solely as evidence for a role for catalase in the microsomal oxidation of alcohols.