Understanding the effects of organic co-solvents on protein structure and function is pivotal to engineering enzymes for biotransformation in non-aqueous solvents. The effects of DMSO on the catalytic activity of cytochrome P450 BM3 have previously been investigated and the importance of Phe87 in its organic co-solvent tolerance was identified. To probe the DMSO inactivation mechanism and the functional role of Phe87 in modulating the organic co-solvent tolerance of P450 BM3, the haem domain (Thr1-Leu455) of the F87A variant was cocrystallized in the presence of 14%(v/v) and 28%(v/v) DMSO. At both DMSO concentrations the protein retained the canonical structure of the P450 haem domain without any sign of partial or global unfolding. Interestingly, a DMSO molecule was found in the active site of both structures, with its O atom pointing towards the haem iron. The orientation of the DMSO molecule indicated a dynamic coordination process that was in competition with the active-site water molecule. The ability of the DMSO molecule to coordinate the haem iron is plausibly the main reason why P450 BM3 is inactivated at elevated DMSO concentrations. The data allowed an interesting comparison with the wild-type structures reported previously. A DMSO molecule was found when the wild-type protein was placed in 28%(v/v) DMSO, in which the DMSO molecule coordinated the haem iron directly via its S atom. Intriguingly, no DMSO molecule was observed at 14%(v/v) DMSO for the wild-type structure. These results suggested that the bulky phenyl side chain of Phe87 protects the haem from being accessed by the DMSO molecule and explains the higher tolerance of the wild-type enzyme towards organic co-solvents compared with its F87A variant.