N-Hydroxy-N,N'-diacetylbenzidine (N-HO-DABZ) has been shown to be an in vitro metabolite of benzidine in several rodent species and may represent the proximate form of the carcinogen. Like other arylhydroxamic acids, N-HO-DABZ may be converted to an ultimate carcinogenic electrophile by metabolic O-sulfonation in hepatic cytosol. To investigate this possibility, liver cytosols from rats, mice, and hamsters were assayed for their ability to catalyze the 3'-phosphoadenosine 5'-phosphosulfate-dependent metabolism of N-HO-DABZ and the formation of an adduct with methionine. For comparative purposes, sulfotransferase activity for N-hydroxy-2-acetylaminofluorene (N-HO-AF) was also measured. In the rat, N-HO-DABZ and N-HO-AAF were metabolized at rates of 2.5 and 4.3 nmol of arylhydroxamic acid lost per in per mg of protein, respectively. In the mouse, these rates were 0.5 nmol for N-HO-DABZ and less than 0.05 nmol for N-HO-AAF. Sulfotransferase activity for these substrates in hamster liver cytosol could not be detected (less than 0.05 nmol/min/mg). The inclusion of methionine in sulfotransferase incubation mixtures and subsequent heating resulted in the formation of methylmercapto arylamides from both N-HO-DABZ and N-HO-AAF. From 20 to 40% of the N-HO-DABZ metabolized was trapped and recovered as an adduct, while 80 to 100% of the N-HO-AAF metabolized was similarly obtained. A methylmercapto-N,N'-diacetylbenzidine derivative was also obtained by reaction of N-acetoxy-N,N'-diacetylbenzidine with methionine. Its identity to the adduct formed in the sulfotransferase incubation mixture was established by high-pressure liquid chromatography, ultraviolet light, and mass spectroscopic analyses. By comparing the 13C nuclear magnetic resonance spectra of the synthetic methylmercapto derivative with several model compounds and using chemical shift additivity relationships, the adduct was identified as 3-methylmercapto-N,N'-diacetylbenzidine. Since the yield of the product from N-acetoxy-N,N'-diacetylbenzidine and methionine did not vary appreciably with pH (4 to 8), a reaction mechanism involving an electrophilic carbocation at position 3 is proposed. These studies demonstrate that N-HO-DABZ can be esterified to an electrophilic reactant by hepatic sulfotransferases in the rat and the mouse and suggest the involvement of this metabolite in the hepatocarcinogenicity of benzidine.