The neutrophil response to inflammatory stimuli involves the formation of reactive oxygen species and secretion of granule enzymes. In studying secretion of vitamin B12 binding protein by human neutrophils, we noted a major decrease in total recoverable activity from the extracellular fluid plus the stimulated cells (54% of resting cells). Recovery of B12 binding protein from neutrophils exposed to phorbol myristate acetate or opsonized zymosan was significantly enhanced on addition of heme enzyme inhibitors (azide, cyanide) or catalase or when halide-free medium was used. The changes in B12 binding protein recovery were attributable entirely to increases in extracellular fluid levels, and cell pellet content was unaffected. These data indicate extracellular destruction of functional B12 binding protein by the halide-dependent heme enzyme myeloperoxidase and H2O2. Kinetic studies demonstrated rapid secretion of B12 binding protein in the first two to five minutes, followed by its inactivation over the next 20 to 30 minutes. A cell-free extract of vitamin B12 binding protein was readily inactivated on exposure to purified myeloperoxidase, H2O2, and a halide. These findings document a functional interaction among products of the neutrophil specific granules (B12 binding protein), azurophil granules (myeloperoxidase), and metabolic burst (H2O2). They provide an interesting model for the modulation of the inflammatory response by oxidation of secretory products of neutrophils.