Geranylhydroquinone 3"-hydroxylase, which is likely to be involved in shikonin and dihydroechinofuran biosynthesis, was identified in cell suspension cultures of Lithospermum erythrorhizon Sieb. et Zucc. (Boraginaceae). The enzyme hydroxylates the isoprenoid side chain of geranylhydroquinone (GHQ), a known precursor of shikonin. Proton/proton correlation spectroscopic and proton/proton long-range correlation spectroscopic studies confirmed that hydroxylation takes place specifically at position 3", i.e. at the methyl group involved in the cyclization reaction. The enzyme is membrane-bound and was found in the microsomal fraction. It requires NADPH and molecular oxygen as cofactors, and is inhibited by cytochrome P-450 inhibitors such as cytochrome c and CO. The inhibitory effect of CO is reversed by illumination. These data suggest that the enzyme is a cytochrome P-450-dependent monooxygenase. The optimum pH of GHQ 3"-hydroxylase is 7.4, and the apparent K(m) value for GHQ is 1.5 microM. The reaction velocity obtained with 3-geranyl-4-hydroxybenzoic acid was more than 100 times lower than that obtained with geranylhydroquinone.