Abstract Cytochromes P450 belong to the ever‐growing superfamily of heme‐containing monooxygenases with currently more than 7700 gene sequences found in all domains of life. Cytochrome P450 enzymes play a central role in drug metabolism and have been shown to be involved in the biosynthesis of important natural compounds. These enzymes convert a vast range of substrates and catalyze diverse reactions. Their properties have been used for drug development, bioremediation and the synthesis of fine chemicals. Significant progress has been made over the past decade in engineering P450 monooxygenases with widely altered substrate specificities, substantially increased activity and enhanced stability. Furthermore, several approaches for the replacement or regeneration of the cofactor NAD(P)H have been developed, allowing the more cost‐effective use of P450 enzymes. In this chapter, we focus on the recent progress in applying P450 monooxygenases as biocatalysts. The P450 engineering issue will also be discussed.