Agrocybe aegerita peroxidase (AaP) is a versatile heme-thiolate protein that can act as a peroxygenase and catalyzes, among other reactions, the hydroxylation of aromatic rings. This paper reports a rapid and selective spectrophotometric method for directly detecting aromatic hydroxylation by AaP. The weakly activated aromatic compound naphthalene served as the substrate that was regioselectively converted into 1-naphthol in the presence of the co-substrate hydrogen peroxide. Formation of 1-naphthol was followed at 303 nm (epsilon(303) = 2,010 M-1 cm(-1)), and the apparent Michaelis-Menten (K-m) and catalytic (k(cat)) constants for the reaction were estimated to be 320 mu M and 166 s(-1), respectively. This method will be useful in screening of fungi and other microorganisms for extracellular peroxygenase activities and in comparing and assessing different catalytic activities of haloperoxidase-peroxygenases.