The green alga Chlorella zofingiensis produces large amounts of the valuable ketocarotenoid astaxanthin under dark, heterotrophic growth conditions, making it potentially employable for commercial production of astaxanthin as feed additives, colorants, and health products. Here, we report the identification and characterization of a beta-carotene oxygenase (CRTO) gene that is directly involved in the biosynthesis of ketocarotenoids in C. zofingiensis. The open reading frame of the crtO gene, which is interrupted by three introns of 243, 318, and 351 bp, respectively, encodes a polypeptide of 312 amino acid residues. Only one crtO gene was detected in the genome of C. zofingiensis. Furthermore, the expression of the crtO gene was transiently up-regulated upon glucose treatment. Functional complementation in Escherichia coli showed that the coding protein of the crtO gene not only exhibits normal CRTO activity by converting beta-carotene to canthaxanthin via echinenone, but also displays a high enzymatic activity of converting zeaxanthin to astaxanthin via adonixanthin. Based on the bifunctional CRTO, a predicted pathway for astaxanthin biosynthesis in C. zofingiensis is described, and the CRTO is termed as carotenoid 4,4'-beta-ionone ring oxygenase.