Background: Cytochrome P450 monooxygenases - able to regio- and stereoselectively hydroxylate non-activated carbon atoms - are important enzymes for the synthesis of valuable intermediates in the production of steroid hormones in the pharmaceutical industry. However, up to now only a few bacterial enzymes able to hydroxylate steroids have been reported. CYP154C5 from Nocardia farcinica IFM 10152, a bacterial P450 monooxygenase, was previously shown to convert testosterone to 16 alpha-hydroxytestosterone. Since the hydroxylation at 16 alpha-position is of special interest for the pharmaceutical industry, we have studied this enzyme in more detail to investigate its activity and selectivity in bioconversions of further steroids. Results: CYP154C5 was coexpressed in Escherichia coli together with putidaredoxin and putidaredoxin reductase from Pseudomonas putida as redox partners for electron transfer and applied in bioconversions of various pregnanes and androstanes [pregnenolone (1), dehydroepiandrosterone (2), progesterone (3), androstenedione (4), testosterone (5) and nandrolone (6)]. Structure elucidation of the formed products revealed an exclusive regio- and stereoselectivity of CYP154C5, always yielding the corresponding 16 alpha-hydroxylated steroids. Application of whole cells expressing the three components, P450, Pdx and PdR, in steroid biotransformations resulted in significantly higher conversions and total turnover numbers (TTN) compared to reactions using cell-free extracts. Additionally, considerably higher substrate loads (up to 15 mM) were tolerated by the whole-cell system. Furthermore, turnover numbers (TON) were determined for the six different steroids using whole cells. Thus, testosterone was found to be the worst substrate with a TON of only 0.8 mu mol substrate consumed min(-1) mu mol(-1) CYP154C5, while progesterone and pregnenolone were converted the fastest resulting in TON of 3.3 mu mol substrate consumed min(-1) mu mol(-1) CYP154C5. Conclusion: CYP154C5 from N. farcinica constitutes a promising catalyst due to its high regio- and stereoselectivity in the hydroxylation of different steroids as well as its efficient expression in E. coli at high yields. Using this enzyme, 16 alpha-hydroxylated steroids, which are important precursors for the synthesis of high value steroidal drugs in the pharmaceutical industry, can be selectively produced on preparative scale with TTN (mu mol substrate consumed mu mol(-1) CYP154C5) exceeding 2000.