Induction of CYP2E1 by ethanol is one of the central pathways by which ethanol generates a state of oxidative stress in hepatocytes. To study the biochemical and toxicological actions of CYP2E1, our laboratory established HepG2 cell lines which constitutively overexpress CYP2E1 and characterized these cells with respect to ethanol toxicity. Addition of ethanol or an unsaturated fatty acid such as arachidonic acid or iron was toxic to the CYP2E1-expressing cells but not control cells. This toxicity was associated with elevated lipid peroxidation and could be prevented by antioxidants and inhibitors of CYP2E1. Apoptosis occurred in the CYP2E1-expressing cells exposed to ethanol, arachidonic acid, or iron. Removal of GSH caused a loss of viability in the CYP2E1-expressing cells even in the absence of added toxin or pro-oxidant. This was associated with mitochondrial damage and decreased mitochondrial membrane potential. Surprisingly, CYP2E1-expressing cells had elevated GSH levels, due to transcriptional activation of gamma glutamyl cysteine synthetase. Similarly, levels of catalase, alpha-, and microsomal glutathione transferase were also increased, suggesting that upregulation of these antioxidant genes may reflect an adaptive mechanism to remove CYP2E1-derived oxidants. While it is likely that several mechanisms contribute to alcohol-induced liver injury, the linkage between CYP2E1-dependent oxidative stress, mitochondrial injury, and GSH homeostasis may contribute to the toxic action of ethanol on the liver. HepG2 cell lines overexpressing CYP2E1 may be a valuable model to characterize the biochemical and toxicological properties of CYP2E1.