Cytochrome P450 BM-3 (P450 BM-3 ) is a flavoprotein reductase− heme fusion protein from the bacterium Bacillus megaterium that has been well-characterized in many biophysical aspects. Although the enzyme is known to catalyze the hydroxylation of medium-and long-chain fatty acids at high rates, no definitive physiological function has been associated with this process in the organism other than a possible protective role. We found that P450 BM-3 rapidly hydroxylates alkyl sulfates, particularly those with 12−16 carbons (i.e., including dodecyl sulfate), in a similar manner to the fatty acids. The products were characterized as primarily ω-1 hydroxylated alkyl sulfates (plus some ω-2 and ω-3 hydroxylation products), and some further oxidation to dihydroxy and keto derivatives also occurred. Binding of the alkyl sulfates to P450 BM-3 converted the iron from the low-spin to high-spin form in a saturable manner, consistent with the catalytic results. Rates of binding decreased as a function of increasing concentration of dodecyl sulfate or the fatty acid myristate. This pattern is consistent with a binding model involving multiple events and with conformational selection (equilibrium of the unbound enzyme prior to binding) instead of an induced fit mechanism. Neither C−H bond-breaking nor product release was found to be rate-limiting in the oxidation of lauric acid. The conformational selection results rationalize some known crystal structures of P450 BM-3 and can help explain the flexibility of P450 BM-3 and engineered forms in accepting a great variety of substrates.