The developmental patterns of aryl hydrocarbon hydroxylase (AHH) activity and NADPH-cytochrome c reductase activity were followed during embryonic development in Fundulus. AHH activity was localized in microsomal fractions prepared from whole Fundulus embryos and eleutheroembryos. On the basis of this subcellular localization, the requirements of O2 and NADPH for activity, and sensitivity to carbon monoxide and cytochrome c inhibition, the AHH activity in Fundulus embryos and eleutheroembryos appeared to be cytochrome P-450 dependent. AHH activity was measurable in stages prior to the appearance of the liver rudiment, and during subsequent embryonic development the extrahepatic tissues were likely to have contributed substantially to the AHH activity measured. At all stages assayed before hatching, microsomal AHH specific activity remained uniformly low, but within 24 hr of hatching, AHH specific activity increased about ninefold. This posthatching increase in AHH activity was not age dependent, nor developmental stage dependent, but rather required hatching, and was not due to the presence of endogenous inhibitors in prehatching stages. The levels of NADPH-cytochrome c reductase activity and AHH activity were not closely correlated in whole embryo and eleutheroembryo microsomes, but the AHH activity in these preparations apparently was not limited by the levels of the NADPH-cytochrome c (P-450) reductase. The presence of AHH activity in Fundulus embryos during the period of active organogenesis, prior to hatching, indicates that this species is likely to be susceptible to a variety of teratogens requiring metabolic activation, and this may be the case for other species of fish as well.