Sterol 14alpha-demethylase (CYP51) is one of the key enzymes for sterol biosynthesis in fungi; it is widely distributed in all members of the cytochrome P450 superfamily. In this study, AcCyp51, encoding a cytochrome P450 sterol 14alpha-demethylase, was obtained from the sequences of EST libraries of Antrodia cinnamomea by using 5' RACE and genome walking methods. The open reading frame of AcCyp51 is 1635 bp and encodes 544 amino acids. The recombinant protein of AcCYP51 fused with glutathione-S-transferase from Escherichia coli revealed the demethylating activity by using lanosterol as substrate and GC-MS analysis. Gene expression levels of AcCYP51 were higher in natural basidiomes than in other cell types. Transcription of AcCYP51 increased in various culture conditions including adding squalene, lanosterol, itroconazole, and oleic acid as inducers. These reveal the important functions of AcCYP51 in basidiomatal formation and suggest that it might participate in other biological processes.