The ActVA-ActVB system from Streptomyces coelicolor is a twocomponent flavin-dependent monooxygenase that belongs to an emerging class of enzymes involved in various oxidation reactions in microorganisms. The ActVB component is a NADH:flavin oxidoreductase that provides a reduced FMN to the second component, ActVA the proper monooxygenase. In this work, we demonstrate that the ActVA-ActVB system catalyzes the aromatic monohydroxylation of dihydrokalafungin by molecular oxygen. In the presence of reduced FMN and molecular oxygen, the ActVA active site accommodates and stabilizes an electrophilic flavin FMN-OOH hydroperoxide intermediate species as the oxidant. Surprisingly, we demonstrate that the quinone form of dihydrokalafungin is not oxidized by the ActVA-ActVB system, whereas the corresponding hydroquinone is an excellent substrate. The enantiomer of dihydrokalafungin, nanaomycin A, as well as the enantiomer of kalafungin, nanaomycin D, are also substrates in their hydroquinone forms. The previously postulated product of the ActVA-ActVB system, the antibiotic actinorhodin, was not found to be formed during the oxidation reaction.The two-component flavin-dependent monooxygenases have recently emerged as an important class of enzyme systems involved in biological oxidations (1). They are composed of two enzymes. First, a NAD(P)H:flavin oxidoreductase that catalyzes the reduction of free flavin, flavin adenine dinucleotide (FAD) or flavin mononucleotide (FMN), by reduced pyridine nucleotides, NADPH or NADH (2-7). Second, an oxygenase that binds the resulting free reduced flavin together with the substrate in the active site (8 -20). There is general agreement that the reaction proceeds through an oxidation of the flavin by molecular oxygen to generate a flavin hydroperoxide intermediate (21). This is followed by transfer of a single oxygen atom from the electrophilic peroxide to the substrate, generating the oxidized product of the reaction (21). Therefore in this two-component system, NAD(P)H oxidation and the hydroxylation reaction are catalyzed by separate polypeptides. In all cases, with the exception of luciferase (22), there is no evidence for an interaction between the two components and a channeling mechanism allowing the flavin to travel from one protein to another within a protein complex. Accordingly, in most cases, the oxidoreductase component can be replaced by other flavin reductases, including the non-homologous ones from other organisms (4, 5). The flavin transfer process from the oxidoreductase to the oxygenase is thus simply under thermodynamic control (5, 20).The most extensively studied oxygenase components so far are those utilizing FADH 2 as a cofactor, such as 4-hydroxyphenylacetate monooxygenase (HpaB) from Escherichia coli (8), phenol hydroxylase (PheA1) from Bacillus thermoglucosidaflurescens (4), and styrene monooxygenase (StyA) from Pseudomonas fluorescens (12, 13). In contrast, the oxygenases utilizing FMNH 2 (termed FMN red herein) have been much less investigated. Examples are tho...