In the model P450 BM3 system, the P450 is fused to its diflavin reductase partner in a single polypeptide. BM3 dimerizes in solution, but the catalytic relevance of the phenomenon was hitherto unknown. We show that BM3 fatty acid hydroxylase specific activity decreases sharply at low enzyme concentrations, consistent with separation of active dimer into inactive monomer. Reductase-dependent specific activities are maintained or enhanced at low concentration, suggesting inter-flavin electron transfer is unaffected. Fatty acid oxidation is reconstituted by mixing inactive oxygenase (A264H) and FMN-depleted (G570D) mutants, demonstrating that inter-monomer (FMN 1-to-heme2) electron transfer supports oxygenase activity in the BM3 dimer.