Evolutionary links between cytochrome P450 monooxygenases, a superfamily of extraordinarily divergent heme-thiolate proteins catalyzing a wide array of NADPH/NADH- and O2-dependent reactions, are becoming better understood because of availability of an increasing number of fully sequenced genomes. Among other reactions, P450s catalyze the site-specific oxidation of the precursors to macrolide antibiotics in the genus Streptomyces introducing regiochemical diversity into the macrolide ring system, thereby significantly increasing antibiotic activity. Developing effective uses forStreptomyces enzymes in biosynthetic processes and bioremediation requires identification and engineering of additional monooxygenases with activities toward a diverse array of small molecules. To elucidate the molecular basis for substrate specificity of oxidative enzymes toward macrolide antibiotics, the x-ray structure of CYP154C1 from Streptomyces coelicolor A3(2) was determined (Protein Data Bank code 1GWI). Relocation of certain common P450 secondary structure elements, along with a novel structural feature involving an additional β-strand transforming the five-stranded β-sheet into a six-stranded variant, creates an open cleft-shaped substrate-binding site between the two P450 domains. High sequence similarity to macrolide monooxygenases from other microbial species translates into catalytic activity of CYP154C1 toward both 12- and 14-membered ring macrolactonesin vitro.