AbstractXylene oxygenase (XO), an enzyme system fromPseudomonas putidamt‐2, selectively oxidizes the methyl side group of toluene‐derived compounds. The enzyme is related toPseudomonas oleovoransmono‐oxygenase (POM), which has been used to produce optically active epoxides from various alkenes at high enantiomeric excess.We have introduced XO intoEscherichia coliand produced variously substituted benzyl alcohols from toluene derivatives and optically active styrene epoxides from styrene,m‐andp‐chlorostyrene andm‐andp‐methylstyrene using this biocatalyst. The products of oxidation of styrene and styrene derivatives had enantiomeric excesses(ees) ranging from 37% to over 98%.Similarly,Pseudomonas putidawas engineered such that the hydroxylation of compounds by POM could be investigated independent of subsequent product degradation. The biocatalyst accepted a wide range of substrates and oxidized both linear and branched alkanes, and cyclic alkanes as well as alkylbenzenes to the corresponding alcohols.In this review we describe the catalytic potential of engineered biocatalysts based on both XO and POM and discuss the structural and functional similarities of these non‐heme iron