The mushroom metabolite gamma-L-glutaminyl-3,4-dihydroxybenzene (GDHB) was found to have an LD50 of 100 to 200 mg/kg in neonatal C57Bl/6J mice. Adult mice given 200 mg/kg GDHB showed histopathologic evidence of proximal convoluted tubular injury as early as 2 hours after injection, which progressed by 24 hours to profound acute tubular necrosis. Focal acinar epithelial cell necrosis in the pancreas was also observed. The time course and location of the injury suggested that appearance of the ultimate toxic metabolite could be due to cleavage of GDHB by gamma-glutamyl transpeptidase (GGTP). The reaction in vitro of GDHB with crude porcine GGTP resulted in the release of 4-amino-catechol which air oxidized to 2-hydroxy--4-iminoquinone (HIQ), a known sulfhydryl reagent and cytotoxic compound. Synthesis of N2-methyl-gamma-glutaminyl-3,4-dihydroxybenzene (MeGDHB) provided a compound whose oxidized derivatives, when compared with those of GDHB, had similar half-wave potentials and visible absorption maxima. MeGDHB was resistant to cleavage by GGTP and was without apparent toxicitiy at 2-3 times the LD50 of GDHB. Therefore, cleavage by GGTP, an enzymatic transformation accessible to GDHB but unavailable to MeGDHB, is proposed as the mechanism of activation of the mushroom metabolite. The following pathogenic sequence is indicated: 1) release of 4-aminocatechol from GDHB by the action of GGTP and 2) irreversible injury resulting both from the generation of free radicals by the autoxidation of 4-aminocatechol and from the reaction of HIQ with cellular nucleophils, particularly sulfhydryl groups.