Cytochrome P450foxy (P450foxy, CYP505) is a fused protein of cytochrome P450 (P450) and its reductase isolated from the fungus Fusarium oxysporum, which catalyzes the subterminal (omega-1 approximately omega-3) hydroxylation of fatty acids. Here, we produced, purified and characterized a fused recombinant protein (rP450foxy) using the Escherichia coli expression system. Purified rP450foxy was catalytically and spectrally indistinguishable from the native protein, but most of the rP450foxy was recovered in the soluble fraction of E. coli cells unlike the membrane-bound native protein. The results are consistent with our notion that the native protein is targeted to the membrane by a post-translational modification mechanism. We also discovered that P450foxy could use shorter saturated fatty acid chains (C9 and C10) as a substrate. The regiospecificity (omega-1 approximately omega-3) of hydroxylation due to the enzymatic reaction for the short substrates (decanoate, C10; undecanoate, C11) was the same as that for longer substrates. Steady state kinetic studies showed that the kcat values for all substrates tested (C9-C16) were of the same magnitude (1200-1800 min-1), whereas the catalytic efficiency (kcat/Km) was higher for longer fatty acids. Substrate inhibition was observed with fatty acid substrates longer than C13, and the degree of inhibition increased with increasing chain length. This substrate inhibition was not apparent with P450BM3, a bacterial counterpart of P450foxy, which was the first obvious difference in their catalytic properties to be identified. Kinetic data were consistent with the inhibition due to binding of the second substrate. We discuss the inhibition mechanism based on differences between P450foxy and P450BM3 in key amino acid residues for substrate binding.