The incubation of microsomes of whole skin, dermis and epidermis with 14C testosterone in the presence of NADPH resulted in the formation of 6β-, 7α- and 16α-testosterone. Maximum enzyme activity occurred in epidermal microsomes followed by dermis and whole skin. Epidermal testosterone hydroxylase activity required NADPH and oxygen and was found to be inhibited by SKF 525A and metyrapone. Our data strongly suggest that testosterone is metabolized by the cytochrome P-450 dependent monooxygenase in skin and provides the first evidence for an endogenous substrate for cytochrome P-450 in this tissue. The formation of several hydroxylated products further suggests the existence of multiple isozymes of cytochrome P-450 in rat skin. These studies provide additional evidence that target tissues may modulate their hormone levels by enzyme pathways that are locally regulated. © 1987.