Enterally administered, heme is a good source of iron in humans and other animals, but the metabolism of heme by enterocytes has not been fully characterized. Caco-2 cells in culture provide a useful model for studying cells that resemble small intestinal epithelium, both morphologically and functionally. In this paper we show that heme oxygenase, the rate-controlling enzyme of heme catabolism, is present in abundance in Caco-2 cells, and that levels of its mRNA and activity can be increased by exposure of the cells to heme or metal ions (cadmium, cobalt). Caco-2 cells also contain biliverdin reductase activity which, in the basal state, is similar to that of heme oxygenase (approximately 40 pmole of product per mg protein per minute); however, when heme oxygenase is induced, biliverdin reductase may become rate-limiting for bilirubin production.