A novel dehydratase that catalyzes the stoichiometric dehydration of Z-phenylacetaldoxime to phenylacetonitrile has been purified 483-fold to homogeneity from a cell-free extract of Bacillus sp. strain OxB-1 isolated from soil. It has a M(r) of about 40 000 and is composed of a single polypeptide chain with a loosely bound protoheme IX. The enzyme is inactive unless FMN is added to the assay, but low activity is also observed when sulfite replaces FMN. The activity in the presence of FMN is enhanced 5-fold under anaerobic conditions compared to the activity measured in air. The enzyme has maximum activity at pH 7.0 and 30 degrees C, and it is stable at up to 45 degrees C at around neutral pH. The aerobically measured activity in the presence of FMN is also enhanced by Fe(2+), Sn(2+), SO(3)(2)(-), and NaN(3). Metal-chelating reagents, carbonyl reagents, electron donors, and ferri- and ferrocyanides strongly inhibit the enzyme with K(i) values in the micromolar range. The enzyme is active with arylalkylaldoximes and to a lesser extent with alkylaldoximes. The enzyme prefers the Z-form of phenylacetaldoxime over its E-isomer. On the basis of its substrate specificity, the enzyme has been tentatively named phenylacetaldoxime dehydratase. The gene coding for the enzyme was cloned into plasmid pUC18, and a 1053 base-pair open reading frame that codes for 351 amino acid residues was identified as the oxd gene. A nitrilase, which participates in aldoxime metabolism in the organism, was found to be coded by the region just upstream from the oxd gene. In addition an open reading frame (orf2), whose gene product is similar to bacterial regulatory (DNA-binding) proteins, was found just upstream from the coding region of the nitrilase. These findings provide genetic evidence for a novel gene cluster that is responsible for aldoxime metabolism in this microorganism.