A crude microsomal fraction isolated from red hake (Urophycis chuss) muscle demethylated trimethylamine-N-oxide (TMAO). Two cofactor systems were capable of stimulating activity; the system of NADH and FMN required anaerobic conditions while the other system, composed of iron and cysteine and/or ascorbate functioned in the presence or absence of oxygen. The components of each cofactor system functioned synergistically and kinetic parameters were established for each. Of several amine compounds common to fish muscle, TMAO was the only substrate demethylated by the microsomes. Activity was inhibited by iodoacetamide, potassium cyanide, and sodium azide under certain conditions, but not by carbon monoxide. An enzymic nature of the reaction was demonstrated by the properties of heat lability, sensitivity to protease treatment, the requirement of microsomes for TMAO demethylation and by the exhibition of typical hyperbolic kinetics with respect to substrate (TMAO). Moreover, TMAO demethylation by the microsomes was 3 to 4 orders of magnitude faster than the non-enzymic reaction and the reaction was specific for dimethylamine (DMA) as product. It appears the two cofactor systems may share a common catalytic unit in the process of TMAO demethylation.