<jats:title>ABSTRACT</jats:title> <jats:p> The biosynthesis of the thaxtomin cyclic dipeptide phytotoxins proceeds nonribosomally via the thiotemplate mechanism. Acyladenylation, thioesterification, <jats:italic>N</jats:italic> -methylation, and cyclization of two amino acid substrates are catalyzed by the <jats:italic>txtAB</jats:italic> -encoded thaxtomin synthetase. Nucleotide sequence analysis of the region 3′ of <jats:italic>txtAB</jats:italic> in <jats:italic>Streptomyces acidiscabies</jats:italic> 84.104 identified an open reading frame (ORF) encoding a homolog of the P450 monooxygenase gene family. It was proposed that thaxtomin A phenylalanyl hydroxylation was catalyzed by the monooxygenase homolog. The ORF was mutated in <jats:italic>S. acidiscabies</jats:italic> 84.104 by using an integrative gene disruption construct, and culture filtrate extracts of the mutant were assayed for the presence of dehydroxy derivatives of thaxtomin A. Reversed-phase high-performance liquid chromatography (HPLC) and HPLC-mass spectrometry indicated that the major component in culture filtrate extracts of the mutant was less polar and smaller than thaxtomin A. Comparisons of electrospray mass spectra as well as <jats:sup>1</jats:sup> H- and <jats:sup>13</jats:sup> C-nuclear magnetic resonance spectra of the purified compound with those previously reported for thaxtomins confirmed the structure of the compound as 12,15- <jats:italic>N</jats:italic> -dimethylcyclo-( <jats:sc>l</jats:sc> -4-nitrotryptophyl- <jats:sc>l</jats:sc> -phenylalanyl), the didehydroxy analog of thaxtomin A. The ORF, designated <jats:italic>txtC</jats:italic> , was cloned and the recombinant six-His-tagged fusion protein produced in <jats:italic>Escherichia coli</jats:italic> and purified from cell extracts. TxtC produced in <jats:italic>E. coli</jats:italic> exhibited spectral properties similar to those of cytochrome P450-type hemoproteins that have undergone conversion to the catalytically inactive P420 form. Based on these properties and the high similarity of TxtC to other well-characterized P450 enzymes, we conclude that <jats:italic>txtC</jats:italic> encodes a cytochrome P450-type monooxygenase required for postcyclization hydroxylation of the cyclic dipeptide.