The mechanism of the in vitro PGBx effect on mitochondria was studied by determining the specific requirements of the assay system composition. These studies showed that (a) rat liver mitochondria must first be exposed to hypotonic media containing PGBx under aerobic conditions, (b) oxygen, Pi, Mg++, phosphate acceptor (nucleotides), and some oxidizable substrates are essential components to yield optimal phosphorylation values. KCl and bovine serum albumin are non-essential components. With regard to nucleotide acceptor specificity, the AMP, ADP, and glucose-ADP-hexokinase systems were satisfactory. With regard to substrate specificity, only beta-hydroxybutyrate and externally reduced NAD+ were unsatisfactory. The requirement for oxygen was twofold: (a) as an absolute requirement for oxidative phosphorylation, and (b) as a requirement for the hypotonic degradation of mitochondria. These results suggest that PGBx reacts with mitochondria to "protect" against degradation during aerobic hypotonic exposure.