N-acyloxyalkylation of NH-acidic compounds can be a prodrug approach for e.g. tertiary or some N-heterocyclic amines and secondary amides and have the potential to modify the properties of the parent drug for specific uses, for example its physicochemical, pharmacokinetic or biopharmaceutical properties. Aripiprazole lauroxil was prepared as a model compound for such prodrugs and its bioconversion was investigated both in vitro and in vivo. Theoretically, N-acyloxyalkyl derivates of NH-acid compounds undergo a two-step bioconversion into the parent NH-acidic drug through an N-hydroxyalkyl intermediate. However, to our knowledge no published studies have investigated the formation of an intermediate in vivo. In the present study, it was demonstrated that the assumed N-hydroxymethyl intermediate was readily observed both in vitro and in vivo. In vivo, the observed plasma concentration of the intermediate was at the same level as the drug (aripiprazole). When prodrug intermediates are formed, it is important to make a proper pharmacological, pharmacokinetic and toxicological evaluation of the intermediates to ensure patient safety; however, several challenges were identified when testing an N-acyloxyalkyl prodrug. These included the development of a suitable bioanalytical method, the accurate prediction of prodrug bioconversion and thereby the related pharmacokinetics in humans and the toxicological potential of the intermediate.