The structural complexity of taxol dictates continued reliance on biological production methods, which may be improved by a detailed understanding of taxol biosynthesis, especially the rate-limiting steps. The biosynthesis of taxol involves the cyclization of the common isoprenoid intermediate geranylgeranyl diphosphate to taxa-4(5), 11(2)-diene followed by extensive, largely oxidative, modification of this diterpene olefin. We set out to define the first oxygenation step in taxol biosynthesis. Microsomal enzymes from Taxus stem and cultured cells were used to define the first hydroxylation of taxadiene. We confirmed the structure of the reaction product (taxa-4(20), 11(12)-dien-5alpha-ol) by synthesizing this compound. The responsible biological catalyst was characterized as a cytochrome P450 (heme thiolate protein). In vivo studies confirmed that taxadienol is a biosynthetic intermediate and indicated that the hydroxylation step that produces this product is slow relative to subsequent metabolic transformations. The structure of the first oxygenated intermediate on the taxol pathway establishes that the hydroxylation reaction proceeds with an unusual double bond migration that limits the mechanistic possibilities for subsequent elaboration of the oxetane moiety of taxol. The reaction is catalyzed by a cytochrome P450, suggesting that the seven remaining oxygenation steps in taxol biosynthesis may involve similar catalysts. Because the first oxygenation step is slow relative to subsequent metabolic transformations, it may be possible to speed taxol biosynthesis by isolating and manipulating the gene for the taxadiene-5-hydroxylase that catalyzes this reaction.