The occurrence and regulation of cytochrome P450 (P450) in Mortierella alpina and Cunninghamella blakesleeana have been studied to elucidate the enzymatic basis by which 2-cyclopentyl-1,3-benzoxazole is hydroxylated to 3-(benz-1,3-oxazol-2-yl)cyclopentan-1-ol by these organisms. The occurrence of P450 in M. alpina was first been shown after induction with n-hexane. An assay protocol was developed with n-hexane-induced cells and adapted to the handling of fungal mycelia. This allowed the direct spectral determination of P450 in non-fractionated whole-cell suspensions, and an investigation of its regulation. Small amounts of P450 have been detected in early-stationary-phase cells in the absence of exogenous inducers. Addition of 2-cyclopentyl-1,3-benzoxazole or n-hexane resulted in a significant induction of P450. Induction by n-hexane occurs in all phases of growth but decreases rapidly during the stationary phase. The rate of 2-cyclopentyl-1,3-benzoxazole hydroxylation correlated with the content of substrate-induced P450 but not with the level of n-hexane-induced P450. Hydroxylation rates were significantly diminished in the resence of typical P450 inhibitors, the interaction of which with P450 was shown with isolated microsomes of M, alpina. It is concluded that a P450 enzyme is responsible for the hydroxylation of 2-cyclopentyl-1,3-benzoxazole, but that multiple forms of P450 forms occur. Similarly, a dependence on P450 is shown by spectral as well as by inhibition studies for the hydroxylation of this substrate by C. blakesleeana.