The introduction to this thesis examines the importance of N-dealkylation in pharmaceutical studies and considers the scope of microbial transformations and their possible role in effecting N-dealkylation. The experimental section is in eight parts, Chapters 2 and 3 are concerned with the screening of selected Pseudomonads, Streptomyces and fungi for their ability to N-dealkylate drug molecules. The development of qualitative analytical techniques is also detailed. A 'model' transformation system in which the alkaloid codeine is N-demethylated by C. echinulata was selected. Chapter 4 describes quantitative transformation studies in chemically defined growth media with the model transformation system. The effect of growth media components on codeine transformation is investigated and parameters which may influence microbial transformations, such as substrate concentration, are optimised. In Chapter 5, factors likely to affect the transformation process are characterised. These include microbial growth, carbon source depletion, extracellular protein levels and cell lysis. Chapter 6 investigates the feasibility of batch culture transformations in laboratory fermenters and examines the effect of culture pH on N-demethylation. Chapter 7 describes experiments with resting cells, and cell-free extracts prepared from C. echinulata aimed at establishing the type of catabolic regulation operative during transformations and the optimum pH, temperature and cofactor requirements for the N-dealkylation reaction. Studies using specific enzyme inhibitors, in an attempt to characterise the N-demethylase enzyme system, are also reported. Investigations into the microbial transformation of diazepam, a substrate with low aqueous solubility, are described in Chapter 8. Various pharmaceutical solubilisation techniques are investigated in an attempt to increase the diazepam solubility and transformation. The effect of two different fungal growth forms on diazepam transformation is also examined. Chapter 9 examines the effect of structural variations in the codeine molecule on N-demethylation and ability of C. echinulata to cleave more complex N-alkyl functions in 6,7, benzomorphans. In the discussion, the data are considered with reference to current microbial transformation literature and are compared to mammalian biotransformations utilising similar pathways.