The fungus Gnomoniafructicola ATCC 11430 hydroxylates testosterone at C-2β in 40–60% yield. The enzyme involved has been shown to be an inducible CO sensitive, cyanide insensitive oxygenase, with a requirement for theΔ4-3-ketosteroid substrate functionality. The use of 2α- and 2β-deuterium labelled substrates has shown that hydrogen loss from C-2 during 2β hydroxylation is isotope dependent and non-stereospecific. This is interpreted in terms of a Δ2,4-dienolic enzyme-bound intermediate form of the substrate. Keywords: Gnomoniafructicola, hydroxylation, steroids, testosterone.