We describe a simple, flexible, rapid, sensitive and accurate in vivo assay of the bacterial chloramphenicol acetyltransferase (CAT) enzyme expressed in mammalian cells. The assay is based on the ability of the substrate and products of this enzyme reaction (viz. chloramphenicol and its acetylated derivatives) to equilibrate rapidly between the cells and the surrounding tissue culture medium. We find that chloramphenicol added to the culture medium readily enters the cells and becomes acetylated by the intracellular CAT enzyme. The acetyl derivatives leave the cell and appear rapidly in the culture medium. Due to the large excess of the extracellular compared to the intracellular fluid and due to rapid equilibration of chloramphenicol and its derivatives between them, we find that the bulk of the chloramphenicol and its acetyl derivatives are present in the culture medium at any given time point. Chloramphenicol and its acetylated products are extracted from the medium with ethyl acetate and resolved by thin layer chromatography giving an accurate measurement of the intracellular CAT activity. Sensitive and accurate quantitation of CAT activity in this assay is made possible by the addition of trace amounts of 14C-labeled chloramphenicol to the medium.