Integration of the pCG79 temperature-sensitive plasmid carrying Tn611 was used to generate libraries of mutants with blocked sterol-transforming ability of the sterol-utilizing strains Mycobacterium smegmatis mc(2)155 and Mycobacterium phlei M51-Ept. Of the 10,000 insertional mutants screened from each library, 4 strains with altered activity of the sterol-degrading enzymes were identified. A blocked 4-androstene-3,17-dione-producing M. phlei mutant transformed sitosterol to 23,24-dinorcholane derivatives that are useful starting materials for corticosteroid syntheses. A recombinant plasmid, pFJ92, was constructed from the genomic DNA of one of the insertional mutants of M. smegmatis, 10A12, which was blocked in 3-ketosteroid 9alpha-hydroxylation and carrying the transposon insertion and flanking DNA sequences, and used to isolate a chromosomal fragment encoding the 9alpha-hydroxylase. The open reading frame encodes the 383-amino-acid terminal oxygenase of 3-ketosteroid 9alpha-hydroxylase in M. smegmatis mc(2)155 and has domains typically conserved in class IA terminal oxygenases. Escherichia coli containing the gene could hydroxylate the steroid ring at the 9alpha position.