Cysteine conjugate beta-lyase activity from rat kidney cortex was found in the cystosolic and mitochondrial fractions. With 2 mM S-(2-benzothiazolyl)-L-cysteine as the substrate, approximately two-thirds of the total beta-lyase activity was present in the cytosolic fraction. The kinetics of beta-lyase activity with three cysteine S-conjugates were different in the cytosolic and mitochondrial fractions, and the mitochondrial beta-lyase was much more sensitive to inhibition by aminooxyacetic acid than was the cytosolic activity. These results indicate that the beta-lyase activities in the two subcellular fractions are catalyzed by distinct enzymes. Nephrotoxic cysteine S-conjugates of halogenated hydrocarbons that require bioactivation by cysteine conjugate beta-lyase (S-(1,2-dichlorovinyl)-L-cysteine (DCVC), S-(2-chloro-1,1,2-trifluoroethyl)-L-cysteine, CTFC) were potent inhibitors of state 3 respiration in rat kidney mitochondria. Fractionation of mitochondria by digitonin treatment and comparison with marker enzyme distributions showed that the mitochondrial beta-lyase activity is localized in the outer mitochondrial membrane. Inhibition of the beta-lyase prevented the mitochondrial toxicity of DCVC and CTFC, and nonmetabolizable, alpha-methyl analogues of DCVC and CTFC were not toxic. Neither DCVC nor CTFC was toxic to mitoplasts, indicating that activation by the beta-lyase occurs on the outer membrane and may be essential for the expression of toxicity; in contrast, the direct acting nephrotoxin S-(2-chloroethyl)-DL-cysteine was toxic to both mitochondria and mitoplasts. Thus, the suborganelle localization of DCVC and CTFC bioactivation correlates with the observed pattern of toxicity.