The bacterial flavoprotein monooxygenase carries out an oxygen insertion reaction on cyclohexanone, with ring expansion to form the seven-membered cyclic product epsilon-caprolactone, a transformation quite distinct from the phenol leads to catechol transformation carried out by the bacterial flavoprotein aromatic hydroxylases. Cyclohexanone oxygenase catalysis involves the four-electron of O2 at the expense of a two-electron oxidation of NADPH, concomitant with a two-electron oxidation of cyclohexanone to epsilon-caprolactone. NADPH oxidase activity is fully coupled with oxygen transfer to substrate. Steady-state kinetic assays demonstrate a ter-ter mechanism for this enzyme. Pre-steady-state kinetic assays demonstrate the participation of a 4a-hydroperoxyflavin intermediate during catalysis. In addition to its ketolactonizing activity, cyclohexanone oxygenase carries out S-oxygenation of thiane to thiane 1-oxide, a reaction which represents a nucleophilic displacement by the sulfur upon the terminal oxygen of the hydroperoxide. This is in contrast to cyclohexanone oxygenations where the flavin hydroperoxide acts as a nucleophile. In addition, a stable apoenzyme form is accessible and can be reconstituted with various FAD analogues with up to 100% recovery of enzyme activity. The accumulated results presented here support a Baeyer-Villiger rearrangement mechanism for the enzymatic oxygenation of cyclohexanone.