From the induced vegetative cell cultures ofA. ochraceus, a procedure for the preparation of cell-free extract with high 11α-hydroxylase activity was developed. To obtain optimal hydroxylase activity,edta (10mM), glycerol (10%) anddtt (5mM) were required in the grinding medium. Although the optimum pH for the grinding medium was 8·3, the hydroxylase has a pH optimum of 7·7. Microsomes (2mg) isolated from the crude cell-free extract, hydroxylated progesterone in high yields (85–90% in 30 min) in the presence ofnadph and O2. The apparentKm for NADPH and progesterone were 0·052 mM and 0·625 mM respectively. The involvement of cytochrome P-450 system in the hydroxylation reaction was established by various inhibition studies. The hydroxylase activity was inhibited by metyrapone, carbon monoxide,skf-525A andp-cmb. The presence of high levels ofnadph-cytochromec reductase in the microsomal fraction and the strong inhibition of the hydroxylase system by cytochromec indicated that the reductase could be one of the components of the hydroxylase system. Progesterone has the ability to induce the 11α-hydroxylase system significantly, whereas deoxycorticosterone and phenobarbital failed to bring about the induction. However, deoxycorticosterone acted as a good substrate for the 11α-hydroxylase system. The membrane-bound hydroxylase was solubilized using various ionic and non-ionic detergents. Solubilized membrane fraction contained considerable levels of cytochrome P-450 andnadph-cytochromec reductase, besides hydroxylase activity.