Chloroperoxidase oxidizes p-methylanisole and p-ethylanisole to 4-methoxybenzyl alcohol and 1-(4'-methoxyphenyl)ethanol, respectively. It ineffectively oxidizes toluene to benzyl alcohol but does not appear to oxidize toluene substituted with strong electron-withdrawing groups. O-Demethylation is also observed. The enzyme is sensitive to substituents at other than the para position and does not detectably catalyze benzylic hydroxylation of p-methylanisole if it bears additional methyl or methoxy groups. An exception is 1,2-(methylenedioxy)-4-methylbenzene, which is oxidized to both 3,4-(methylenedioxy)benzyl alcohol and 2-hydroxy-4-methylphenol. Studies with H2(18)O2 indicate that all the oxygen incorporated into the product in the oxidation of p-methylanisole to 4-methoxybenzyl alcohol derives from the peroxide. The mono- and dideuterated methyl analogues of p-methylanisole are oxidized with apparent intramolecular isotope effects of 3.51 and 3.34, respectively. Abstraction of a hydrogen from a carbon bearing a hydroxyl group competes effectively with benzylic oxidation because 2-[1,1-2H2]phenylethanol is oxidized to 2-[1-2H]- rather than 2-[1,2-2H2]phenylacetaldehyde. Aldehyde formation therefore involves abstraction of the carbinol hydrogen rather than hydrogen migration to a benzylic carbocation intermediate. Chloroperoxidase resembles cytochrome P450 in that it catalyzes benzylic hydroxylation reactions but it has a more limited substrate specificity.