The white-rot fungus Phanerochaete chrysosporium possesses biodegradative capabilities of polychlorinated dibenzo-p-dioxins (PCDDs). One hundred twenty yeast clones expressing individual P450s of P. chrysosporum (PcCYPs), generated in our previous efforts, were screened for transformation of dioxin, and 40 positive clones were obtained. Of these clones, six clones showed metabolism of 2-chloro-dibenzo-p-dioxin, and a microsomal PcCYP designated as PcCYP11a3 showed much higher activity than any other PcCYPs. The turnover numbers of hydroxylation activities of PcCYP11a3 toward 1-MCDD (58 min(-1)) and 2-MCDD (13 min(-1)) are more than 200 times higher than those of previously reported PcCYP65a2. In addition, PcCYP11a3 catalyzes hydroxylation of 2,3-dichlorodibenzo-p-dioxin. To our best knowledge, PcCYP11a3 has the highest activity toward PCDDs among the known CYPs derived from microorganisms. Although PcCYP11a3 showed no detectable activity toward 2,7-dichloro-dibenzop-dioxin and 2,3,7-trichloro-dibenzo-p-dioxin, PcCYP11a3 is promising as a template whose activity would be enhanced by site-directed mutagenesis.