Chloroperoxidase (CPO) from Caldariomyces fumago was analysed for its ability to oxidize ten different monoterpenes with hydrogen peroxide as oxidant. In the absence of halide ions geraniol and, to a lesser extent, citronellol and nerol were converted into the corresponding aldehydes, whereas terpene hydrocarbons did not serve as substrates under these conditions. In the presence of chloride, bromide and iodide ions, every terpene tested was converted into one or more products. (1S)-(+)-3-carene was chosen as a model substrate for the CPO-catalysed conversion of terpenes in the presence of sodium halides. With chloride, bromide and iodide, the reaction products were the respective (1S,3R,4R,6R)-4-halo-3,7,7-trimethyl-bicyclo[4.1.0]-heptane-3-ols, as identified by H-1 and C-13 nuclear magnetic resonance. These product formations turned out to be strictly regio- and stereoselective and proceeded very rapidly and almost quantitatively. Initial specific activities of halohydrin formation increased from 4.22 U mg(-1) with chloride to 12.22 U mg(-1) with bromide and 37.11 U mg(-1) with iodide as the respective halide ion. These results represent the first examples of the application of CPO as a highly efficient biocatalyst for monoterpene functionalization. This is a promising strategy for 'green' terpene chemistry overcoming drawbacks usually associated with cofactor-dependent oxygenases, whole-cell biocatalysts and conventional chemical methods used for terpene conversions.