Acetaminophen (APAP) is one of the most widely used drugs. Though safe at therapeutic doses, overdose causes mitochondrial dysfunction and centrilobular necrosis in the liver. The first studies of APAP metabolism and activation were published more than 40 years ago. Most of the drug is eliminated by glucuronidation and sulfation. These reactions are catalyzed by UDP-glucuronosyltransferases (UGT1A1 and 1A6) and sulfotransferases (SULT1A1, 1A3/4, and 1E1), respectively. However, some is converted by CYP2E1 and other cytochrome P450 enzymes to a reactive intermediate that can bind to sulfhydryl groups. The metabolite can deplete liver glutathione (GSH) and modify cellular proteins. GSH binding occurs spontaneously, but may also involve GSH-S-transferases. Protein binding leads to oxidative stress and mitochondrial damage. The glucuronide, sulfate, and GSH conjugates are excreted by transporters in the canalicular (Mrp2 and Bcrp) and basolateral (Mrp3 and Mrp4) hepatocyte membranes. Conditions that interfere with metabolism and metabolic activation can alter the hepatotoxicity of the drug. Recent data providing novel insights into these processes, particularly in humans, are reviewed in the context of earlier work, and the effects of altered metabolism and reactive metabolite formation are discussed. Recent advances in the diagnostic use of serum adducts are covered.