Psi factor producing oxygenases (Ppos) are fusion proteins consisting of a peroxidase-like functionality in the N-terminus and a P450-fold in the C-terminal part of the polypeptide chain. It was shown that they are responsible for the production of oxidized fatty acids that play a pivotal role in the control of fungal colonization of plant and mammalian hosts. The similarity of the primary structure of the single domains to various host-derived oxylipin-forming enzymes and functional conservation of these enzymatic activities was the basis for prediction of the 3D conformations of the single domains of a prototype Ppo enzyme. We were able to predict a putative substrate binding pocket in the N-terminal domain of the enzyme and support this finding by site-directed mutagenesis. With the proposed substrate binding mode all known determinants of oxygen insertion are in a reasonable spatial arrangement for catalysis. Additionally, we could identify an arginine and show its involvement in substrate binding by kinetic analysis of the respective variant. While substrate position in the dioxygenase domain is well defined, our results indicate that the substrate binding to the P450 domain is rather unconstrained. Nevertheless an asparagine residue within the I-helix is shown to be involved in catalysis and promotes a shortcut of the typical P450 reaction cycle. Taken together, the results presented here exemplify that fatty acids are oxidized in all kingdoms of life by structural and functional highly conserved enzymes.