Indirubin is a strong inhibitor of several eukaryotic cell signaling pathways and shows promise as a treatment for myelocytic leukemia and Alzheimer's disease. The tmoABCDEF operon, encoding the components of a novel toluene 4-monooxygenase from the paint factory soil isolate, Pseudomonas sp. M4, was cloned and expressed in Escherichia coli. E. coli::pKSR12 expressing the tmo genes was used to develop a two-phase [dioctyl phthalate (DOP)/aqueous medium] culture system that was optimized to obtain maximal yields of indirubin from the starting substrate, indole. DOP was used as the organic phase to solubilize and sequester the toxic indole substrate, making possible the use of high indole concentrations that would otherwise interfere with growth in aqueous media. A 50 % (v/v) DOP two-phase system using tryptophan medium containing 3 mM cysteine, 5 mM indole, and 1 mM isatin yielded 102.4 mg/L of indirubin with no conversion of indole to the less valuable alternate product, indigo.