Phenylacetone monooxygenase (PAMO) is an exceptionally robust Baeyer-Villiger monooxygenase, which makes it ideal for potential industrial applications. However, its substrate scope is limited, unreactive cyclohexanone being a prominent example. Such a limitation is unfortunate, because this particular transformation in an ecologically viable manner would be highly desirable, the lactone and the respective lactam being of considerable interest as monomers in polymer science. We have applied directed evolution in search of an active mutant for this valuable C-C activating reaction. Using iterative saturation mutagenesis (ISM), several active mutants were evolved, with only a minimal trade-off in terms of stability. The best mutants allow for quantitative conversion of 2mM cyclohexanone within 1h reaction time. In order to circumvent the NADP(+) regeneration problem, whole E. coli resting cells were successfully applied. Molecular dynamics simulations and induced fit docking throw light on the origin of enhanced PAMO activity. The PAMO mutants constitute ideal starting points for future directed evolution optimization necessary for an industrial process. Biotechnol. Bioeng. 2015;112: 1354-1364. (c) 2015 Wiley Periodicals, Inc.