1. A potent inhibitor of microsomal mixed-function oxidation has been isolated from the gut contents of larvae of the southern armyworm (Prodenia eridania). 2. Progressive inhibition is associated with a soluble proteinase with a molecular weight of approx. 26000. 3. Although the proteolytic activity of the inhibitor can be reduced by phenylmethanesulphonyl fluoride and other reagents, these materials are only partially effective in protecting the microsomal enzymes. 4. Inhibitory activity is decreased in the presence of bovine serum albumin.