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Background: Alkanes have been hypothesized to act as universal inducers of bacterial cytochrome P450 gene expression. We tested this hypothesis on an unusual P450 gene (cyp110) found on a conserved 11 kilobase episomal DNA element of unknown function found in filamentous cyanobacteria. We also monitored the binding of potential substrates to the P450 protein and explored the distribution of P450 protein in vegetative cells and nitrogen-fixing heterocysts using immuno-electron microscopy., Results: Hexadecane treatments resulted in a two-fold increase in mRNA, and a four-fold increase in P450 protein levels relative to control cultures. Hexane, octane and dodecane were toxic and induced substantial changes in membrane morphology. Long-chain saturated and unsaturated fatty acids were shown to bind the CYP110 protein using a spectroscopic spin-shift assay, but alkanes did not bind. CYP110 protein was detected in vegetative cells but not in differentiated heterocysts where nitrogen fixation occurs., Conclusion: Hexadecane treatment was an effective inducer of CYP110 expression in cyanobacteria. Based on substrate binding profiles and amino acid sequence similarities it is hypothesized that CYP110 is a fatty acid omega-hydroxylase in photosynthetic cells. CYP110 was found associated with membrane fractions unlike other soluble microbial P450 proteins, and in this regard CYP110 more closely resembles eukarytotic P450s. Substrate stabilization is an unlikely mechanism for alkane induction because alkanes did not bind to purified CYP110 protein.