The cytochromes P450 (P450s) are probably nature's most versatile enzymes in terms of both their vast substrate range and the diverse types of molecular transformations performed across the P450 enzyme superfamily. The P450s exquisitely perform highly specific oxidative chemistry, utilizing a sophisticated catalytic reaction mechanism. Recent studies have provided the first definitive characterization of the transient reaction cycle intermediate (compound I) responsible for the majority of P450 oxidative reactions. This major advance comes at a time when P450 engineering has facilitated the elucidation of several mammalian P450 structures and generated P450 variants with novel substrate specificity and reactivity. This review describes recent advances in P450 research and the ramifications for biotechnological and biomedical exploitation of these enzymes.