Oxidations are key reactions in chemical syntheses. Biooxidations using fermentation processes have already conquered some niches in industrial oxidation processes since they allow the introduction of oxygen into non-activated carbon atoms in a sterically and optically selective manner that is difficult or impossible to achieve by synthetic organic chemistry. Biooxidation using isolated enzymes is limited to oxidases and dehydrogenases. Surprisingly, cytochrome P450 monooxygenases have scarcely been studied for use in biooxidations, although they are one of the largest known superfamilies of enzyme proteins. Their gene sequences have been identified in various organisms such as humans, bacteria, algae, fungi, and plants. The reactions catalyzed by P450s are quite diverse and range from biosynthetic pathways (e.g. those of animal hormones and secondary plant metabolites) to the activation or biodegradation of hydrophobic xenobiotic compounds (e.g. those of various drugs in the liver of higher animals). From a practical point of view, the great potential of P450s is limited by their functional complexity, low activity, and limited stability. In addition, P450-catalyzed reactions require a constant supply of NAD(P)H which makes continuous cell-free processes very expensive. Quite recently, several groups have started to investigate cost-efficient ways that could allow the continuous supply of electrons to the heme iron. These include, for example, the use of electron mediators, direct electron supply from electrodes, and enzymatic approaches. In addition, methods of protein design and directed evolution have been applied in an attempt to enhance the activity of the enzymes and improve their selectivity. The promising application of bacterial P450s as catalyzing agents in biocatalytic reactions and recent progress made in this field are both covered in this review.