Testing the toxicities and biological activities of the human metabolites of drugs is important for development of safe and effective pharmaceuticals. Producing these metabolites using human cytochrome P450s is difficult, however, because the human enzymes are costly, poorly stable, and slow. We have used directed evolution to generate variants of P450 BM3 from Bacillus megaterium that function via the “peroxide shunt” pathway, using hydrogen peroxide in place of the reductase domain, oxygen and NADPH. Here, we report further evolution of the P450 BM3 heme domain peroxygenase to enhance production of the authentic human metabolites of propranolol by this biocatalytic route. This system offers a versatile, cost-effective, and scaleable route to the synthesis of drug metabolites. © 2005 Wiley Periodicals, Inc.