Headspace gas analysis has shown that nitrous oxide (N2O) is the principal gas evolved during contact between small volumes of Otto Fuel II (OF) and 82% aqueous hydroxylammonium perchlorate (HAP) at temperatures close to ambient. The gas is produced mainly from the 82% HAP layer and is generated in significant amounts only after the OF has become blackened as a result of extreme degradation. The pH of the HAP solution falls during contact with OF and the OF blackening point is the same for each of three storage temperatures investigated, suggesting that the production of N2O may depend upon the attainment of a specific HAP solution acidity. It is suggested that the propyleneglycol dinitrate (PGDN) component in OF undergoes acid hydrolysis at the liquid/liquid interface and that the nitric acid produced leads to the decrease in HAP solution pH and to stabilizer depletion in OF. Experiments involving contact between 82% HAP and the other components of OF confirm the key role of PGDN: in its absence there is no change in HAP solution acidity, no gas evolution and no violent reaction between the two liquids.