A fatty-acid-metabolizing enzyme from Arabidopsis thaliana, CYP94C1, belonging to the cytochrome P450 family was cloned and characterized. CYP94C1 was heterologously expressed in a Saccharomyces cerevisiae strain (WAT11) engineered for P450 expression. When recombinant yeast microsomes were incubated with lauric acid (C12:0) for 15 min, one major metabolite was formed. The product was purified and identified by GC/MS as 12-hydroxylauric acid. Longer incubation (40 min) led to the formation of an additional metabolite identified by GC/MS as dodecadioic acid. This diacid was also produced by incubation with 12-hydroxylauric acid. These compounds were not produced by incubating microsomes from yeast transformed with a void plasmid, demonstrating the involvement of CYP94C1. This new enzyme also metabolized fatty acids of varying aliphatic chain lengths (C12 to C18) and in-chain modifications, for example, degree of unsaturation or the presence of an epoxide as an additional polar functional group. Transcription of the gene encoding CYP94C1 is enhanced by stress, treatment with the hormone methyl jasmonate and wounding. Treatment with methyl jasmonate also induced lauric acid metabolism in microsomes prepared from Arabidopsis. The induction of hydroxylase activity was dose dependent and increased with exposure time, reaching 16x higher in microsomes from 24-h treated Arabidopsis compared with control plants. Analysis of the metabolites showed a mixture of 12-, 11- and 10-hydroxylauric acids, revealing for the first time the presence of fatty acid in-chain hydroxylase in Arabidopsis.