Background and Purpose Orally administered ketoconazole rarely induces liver injury and adrenal dysfunction. In cellulo studies showed that a metabolite formed by arylacetamide deacetylase (AADAC)-mediated hydrolysis is relevant to ketoconazole-induced cytotoxicity. This study tried to examine the significance of AADAC in ketoconazole-induced toxicity in vivo using Aadac knockout mice. Experimental Approach Wild-type and Aadac knockout mice orally received 150 or 300 mg/kg/day ketoconazole, and plasma parameters, the concentrations of ketoconazole and N-deacetylketoconazole in plasma and tissues, and hepatic mRNA levels of immune- and inflammatory-related factors were measured. The effects of pretreatment with corticosterone (40 mg/kg, s.c.) on ketoconazole-induced liver injury were also examined. Key Results In a study of a single oral administration of 150 mg/kg ketoconazole, the area under the plasma concentration curve values of ketoconazole and N-deacetylketoconazole in Aadac knockout mice were significantly higher and lower than those in wild-type mice, respectively. With the administration of ketoconazole (300 mg/kg/day) for 7 days, Aadac knockout mice showed higher mortality (100%) than wild-type mice (42.9%), with significantly higher plasma alanine transaminase and lower corticosterone levels, representing liver injury and adrenal dysfunction, respectively. In Aadac knockout mice, hepatic mRNA levels of immune- and inflammatory-related factors were increased by the administration of ketoconazole, and the increase was restored by the replenishment of corticosterone, which shows anti-inflammatory effects. Conclusion and Implications Aadac defects exacerbated ketoconazole-induced liver injury by inhibiting glucocorticoid synthesis and enhancing the inflammatory response. This in vivo study revealed that the hydrolysis of ketoconazole by AADAC can mitigate ketoconazole-induced toxicities.