Fungal peroxygenases have recently been shown to catalyze remarkable oxidation reactions. The present study addresses the mechanism of benzylic oxygenations catalyzed by the extracellular peroxygenase of the agaric basidiomycete Agrocybe aegerita. The peroxygenase oxidized toluene and 4-nitrotoluene via the corresponding alcohols and aldehydes to give benzoic acids. The reactions proceeded stepwise with total conversions of 93% for toluene and 12% for 4-nitrotoluene. Using (H2O2)-O-18 as the co-substrate, we show here that H2O2 is the source of the oxygen introduced at each reaction step.A. aegerita peroxygenase resembles cytochromes P450 and heme chloroperoxidase in catalyzing benzylic hydroxylations. (C) 2010 Elsevier Inc. All rights reserved.