Ketoconazole (KC), an antifungal agent, rarely causes severe liver injury when orally administered. It has been reported that KC is mainly hydrolyzed to N-deacetyl ketoconazole (DAK), followed by the N-hydroxylation of DAK by flavin-containing monooxygenase (FMO). Although the metabolism of KC has been considered to be associated with hepatotoxicity, the responsible enzyme(s) remain unknown. The purpose of this study was to identify the responsible enzyme(s) for KC hydrolysis in humans and to clarify their relevance to KC-induced toxicity. Kinetic analysis and inhibition studies using human liver microsomes (HLM) and recombinant enzymes revealed that human arylacetamide deacetylase (AADAC) is responsible for KC hydrolysis to form DAK, and confirmed that FMO3 is the enzyme responsible for DAK N-hydroxylation. In HLM, the clearance of KC hydrolysis occurred to the same extent as DAK N-hydroxylation, which indicates that both processes are not rate-limiting pathways. Cytotoxicity of KC and DAK was evaluated using HepaRG cells and human primary hepatocytes. Treatment of HepaRG cells with DAK for 24 h showed cytotoxicity in a dose-dependent manner, whereas treatment with KC did not show due to the low expression of AADAC. Overexpression of AADAC in HepaRG cells with an adenovirus expression system elicited the cytotoxicity of KC. Cytotoxicity of KC in human primary hepatocytes was attenuated by diisopropylfluorophosphate, an AADAC inhibitor. In conclusion, the present study demonstrated that human AADAC hydrolyzes KC to trigger hepatocellular toxicity.