Alkaloids derived from the tetrahydrobenzylisoquinoline alkaloid (S)-N-methylcoclaurine represent a vast and varied structural array of physiologically active molecules. These compounds range from the dimeric bisbenzylisoquinolines, such as the muscle relaxant (+)-tubocurarine, to the powerful anaesthetic opiate morphine, the antimicrobial berberine and the anti-microbial benzo[c]-phenanthridine sanguinarine. The 3′-hydroxylation of (S)-N-methylcoclaurine is a branch point that is the penultimate step in the biosynthesis of the central alkaloidal intermediate (S)-reticuline. This study identified this enzyme as a cytochrome P-450-dependent mono-oxygenase that has until now eluded attempts at identification using in vitro enzyme assays. Two alleles encoding this new enzyme (S)-N-methylcoclaurine 3′-hydroxylase (CYP80B1) were isolated from a cDNA library prepared from poly(A)+ RNA isolated from methyl jasmonate-induced cell-suspension cultures of the California poppy Eschscholzia californica. Partial clones generated by RT-PCR with cytochrome P-450-specific primers were used as hybridization probes. RNA gel-blot hybridization indicated that the transcripts for CYP80B1 accumulate in response to the addition of methyl jasmonate to the cell culture medium. Both alleles were functionally expressed in Saccharomyces cerevisiae and in Spodoptera frugiperda Sf9 cells in the presence and absence of the E. californica cytochrome P-450 reductase. The enzyme was found to hydroxylate exclusively (S)-N-methylcoclaurine with a pH optimum of 7.5, temperature optimum of 35°C and a Km of 15 μm. In addition to the CYP80B1 alleles, another cytochrome P-450 with an inducible transcript (CYP82B1) was isolated and expressed in the same manner, but was not found to be involved in alkaloid biosynthesis in this plant.