The multidomain fatty-acid hydroxylase flavocytochrome P450 BM3 has been studied as a paradigm model for eukaryotic microsomal P450 enzymes because of its homology to eukaryotic family 4 P450 enzymes and its use of a eukaryotic-like diflavin reductase redox partner. High-resolution crystal structures have led to the proposal that substrate-induced conformational changes lead to removal of water as the sixth ligand to the heme iron. Concomitant changes in the heme iron spin state and heme iron reduction potential help to trigger electron transfer from the reductase and to initiate catalysis. Surprisingly, the crystal structure of the substrate-free A264E heme domain mutant reveals the enzyme to be in the conformation observed for substrate-bound wild-type P450, but with the iron in the low-spin state. This provides strong evidence that the spin-state shift observed upon substrate binding in wild-type P450 BM3 not only is caused indirectly by structural changes in the protein, but is a direct consequence of the presence of the substrate itself, similar to what has been observed for P450cam. The crystal structure of the palmitoleate-bound A264E mutant reveals that substrate binding promotes heme ligation by Glu264, with little other difference from the palmitoleate-bound wild-type structure observable. Despite having a protein-derived sixth heme ligand in the substrate-bound form, the A264E mutant is catalytically active, providing further indication for structural rearrangement of the active site upon reduction of the heme iron, including displacement of the glutamate ligand to allow binding of dioxygen.