Cytochromes P-450 are extremely important in the oxidative metabolism of a variety of endogenous and exogenous compounds in pro- and eukaryotic organisms. Progress in understanding the structure and mechanism of action of this superfamily of enzymes has been hampered by the properties of the eukaryotic enzymes and the availability of only one well-characterized prokaryotic enzyme as a model. We report here the isolation of a Pseudomonas species which will utilize a monoterpene natural product, alpha-terpineol, as its sole source of carbon and energy. Approximately 1% of the soluble protein in the cell-free extract is a novel cytochrome P-450 (P-450terp). This enzyme and its associated iron sulfur protein electron carrier (terpredoxin) have been purified to homogeneity and their NH2-terminal amino acid sequences determined. The amino acid sequences of six tryptic peptide fragments of cytochrome P-450terp have also been determined. This sequence information was used to clone the gene encoding cytochrome P-450terp. Three clones representing approximately 8 kilobase pairs of unique sequences were selected and sequenced. Five non-overlapping open reading frames (ORFs) were found in the sequences, and the translated sequences were used to search the Protein Identification Resource for comparable proteins. The ORFs were identified as: 1) an alcohol dehydrogenase, 2) an aldehyde dehydrogenase, 3) cytochrome P-450terp, 4) terpredoxin reductase, and 5) terpredoxin. The identification of both the cytochrome P-450terp and terpredoxin DNA sequence was confirmed by the presence of each of the corresponding amino acid sequences found in the purified proteins. The five ORFs were bounded on both the 5' and 3' ends by consensus factor-independent terminator sequences. A consensus promoter sequence was found immediately 5' to the first ORF. These results indicate that we have sequenced the complete terp operon. Comparison of the amino acid sequence of cytochrome P-450terp to that of all other cytochromes P-450 has shown that it is the first member of the gene family CYP108. Preliminary characterization of the chemical and physical properties and the preparation of crystals of this new cytochrome P-450, suitable for x-ray diffraction analysis, indicate that it will be useful in comparison studies with other members of this class of proteins.