Through detailed numerical calculations, we have shown that production of thermal photons at the self-absorbed cyclotron higher harmonics and Comptonization of those soft photons in a hot plasma with the electron temperature 10/sup 9/ K provide a natural mechanism to account for the dominant observed features of the X-ray emission in the active galactic nuclei, both in intensities and in spectra. As a most probable environment where the necessary conditions may be satisfied, we propose a hot plasma deep within the accretion flows onto supermassive black holes. Our model is consistent with the rapid time variabilities observed in some of those X-ray sources.