Retinoids are C(20) apocarotenoids that have various important functions in metazoans. In addition, several findings suggest their occurrence in eubacteria, including cyanobacteria. It has been shown that the Synechocystis cytochrome P450 enzyme CYP120A1 is a retinoic acid-binding polypeptide. In this work, we determined the reaction catalyzed by CYP120A1 and investigated its substrate specificity in vitro. CYP120A1-containing microsomes generated in yeast converted all-trans-retinoic acid into a compound exhibiting higher polarity in HPLC analysis. Liquid chromatography-MS analysis suggested the introduction of a single hydroxyl group, and NMR analysis of the purified product revealed C16 or C17 as the reaction site. Incubations with cis-retinoic acids, retinal, 3(R)-OH-retinal, retinol, beta-apo-13-carotenone (C(18)) and beta-apo-14'-carotenal (C(22)) resulted in the formation of the corresponding hydroxyl derivatives, as suggested by HPLC and liquid chromatography-MS analyses. Comparisons of the relative product amounts revealed the highest conversion rate for all-trans-retinoic acid, followed by beta-apo-13-carotenone (C(18)). As shown by real-time RT-PCR, CYP120A1 is expressed under normal growth conditions and is slightly induced by high-intensity light. Our work provides the first enzymatic study of a cyanobacterial cytochrome P450, showing it to be the first nonanimal retinoic acid-metabolizing enzyme characterized so far. Moreover, the CYP120A1-catalyzed reaction represents a novel modification of retinoids.