Acinetobacter sp. strain ST-550 produces indigo from indole in the presence of a large volume of diphenylmethane and a high level of indole. Particular proteins increased remarkably in strain ST-550 grown in the two-phase culture system for indigo production. One of the proteins showed a N-terminal amino acid sequence that was identical to that of the largest subunit of phenol hydroxylase (MopN) from A. calcoaceticus NCB18250. The indigo-producing activity was strongly induced when ST-550 was grown with phenol as a sole carbon source. Genes coding for the multicomponent phenol hydroxylase were cloned, based on the homology with mopKLMOP from A. calcoaceticus NCB18250. Escherichia coli carrying the genes produced indigo from indole. E. coli JA300 and its cyclohexane-resistant mutant, OST3410, carrying the hydroxylase genes and the NADH regeneration system were grown in the two-phase culture system for indigo production. The OST3410 recombinant produced 52 mug indigo ml(-1) of medium in the presence of diphenylmethane. This productivity was 4.3-fold higher than that of the JA300 recombinant.