Aspergillus nidulans utilizes phenylacetate as a carbon source via homogentisate, which is degraded to fumarate and acetoacetate. Mutational evidence strongly suggested that phenylacetate is converted to homogentisate through two sequential hydroxylating reactions in positions 2 and 5 of the aromatic ring. Using cDNA substraction techniques, we have characterized a gene, denoted phacA, whose transcription is strongly induced by phenylacetate and which putatively encodes a cytochrome P450 protein. A disrupted phacA strain does not grow on phenylacetate but grows on 2-hydroxy-or 2,5-dihydroxyphenylacetate. Microsomal extracts of the disrupted strain are deficient in the NADPH-dependent conversion of phenylacetate to 2-hydroxyphenylacetate. We conclude that PhacA catalyzes the ortho-hydroxylation of phenylacetate, the first step of A. nidulans phenylacetate catabolism. The involvement of a P450 enzyme in the ortho-hydroxylation of a monoaromatic compound has no precedent. In addition, PhacA shows substantial sequence divergence with known cytochromes P450 and defines a new family of these enzymes, suggesting that saprophytic fungi may represent a source of novel cytochromes P450.Phenylacetate is a precursor for benzylpenicillin production. phacA disruption increases penicillin production 3-5-fold, indicating that catabolism competes with antibiotic biosynthesis for phenylacetate and strongly suggesting strategies for Penicillium chrysogenum strain improvement by reverse genetics.Aerobic degradation of aromatic hydrocarbons by microbes involves the action of oxygenases (enzymes that incorporate one or two atoms from dioxygen into substrates) acting at two different levels in specific catabolic pathways (1, 2). First, oxygenase enzymes acting at the upstream segment of these pathways incorporate one (monooxygenases, aromatic ring hydroxylases) or two (aromatic ring dioxygenases) oxygen atoms into the aromatic substrate as hydroxyl groups, preparing the ring for a subsequent ring-opening step. In this second step, the dihydroxylated aromatic ring is opened by ring-cleavage dioxygenases.Monooxygenases are a mechanistically diverse group of enzymes (1) including, for example, flavoproteins such as p-hydroxybenzoate hydroxylase (3), multicomponent enzymes such as Pseudomonas mendocina toluene 4-monoxygenase, in which one of the terminal hydroxylase polypeptides contains a binuclear iron cluster (4), or heme-containing cytochrome P450 systems. Monooxygenases of the cytochrome P450 superfamily (5, 6) are widely distributed among living organisms and catalyze a multiplicity of biosynthetic and catabolic reactions, usually with narrow substrate specificity, including the hydroxylation of a variety of lipophylic drugs.In common with other saprophytic microbes, the genetically amenable, obligate aerobic fungus Aspergillus nidulans shows notable metabolic versatility. For example, it can use the aromatic hydrocarbon compound phenylacetate (PhAc) 1 as sole carbon source. Despite the abundant information available on the cataboli...