A Bacillus megaterium strain was isolated from topsoil by a selective screening procedure with allylbenzene as a xenobiotic substrate. This strain performed the hydroxylation chemoselectively (no arene oxidation and overoxidized products) and enantioselectively (up to 99% ee) in the benzylic and nonbenzylic positions of a variety of unfunctionalized arylalkanes. Salycilate and phenobarbital, which are potent inducers of cytochrome P-450 activity, changed the regioselectivity of the microbial CH insertion, without an effect on the enantioselectivity. The biotransformation conditions were optimized in regard to product yield and enantioselectivity by variation of the oxygen-gas supply and the time of the substrate addition. The different product distributions (alpha- versus beta-hydroxylated product) that are obtained on induction of cytochrome P-450 enzyme activity demonstrate the involvement of two or more hydroxylating enzymes with distinct regioselectivities in this biotransformation. An oxygen-rebound mechanism is assumed for the cytochrome P-450-type monooxygenase activity, in which steric interactions between the substrate and the enzyme determine the preferred face of the hydroxy-group transfer to the radical intermediate.