Peptidyl prolyl cis-trans-isomerase (PPI) activity was detected in microsomal fractions from bovine and rat liver. Extensive washing, proteinase and sonication treatments indicated that although some of this activity was due to adsorbed cytosolic enzymes, there was also an active but latent microsomal PPI activity. Density-gradient subfractionation indicated that activity was associated with vesicles derived from both the rough and the smooth endoplasmic reticulum (ER), suggesting that the activity was located within the ER lumen. The luminal PPI activity was inhibited by cyclosporin A and was active towards an unfolded protein substrate as well as towards the standard peptide substrate.