Pseudomonas sp. strain HBP1 was found to grow on 2-hydroxy- and 2,2'-dihydroxy-biphenyl as the sole carbon and energy sources. The first step in the degradation of these compounds was catalyzed by an NADH-dependent monooxygenase. The enzyme inserted a hydroxyl group adjacent to the already existing hydroxyl group to form 2,3-dihydroxybiphenyl when acting on 2-hydroxybiphenyl and to form 2,2',3-trihydroxybiphenyl when acting on 2,2'-dihydroxybiphenyl. To be substrates of the monooxygenase, compounds required a 2-hydroxyphenyl-R structure, with R being a hydrophobic group (e.g., methyl, ethyl, propyl, sec-butyl, phenyl, or 2-hydroxyphenyl). Several chlorinated hydroxybiphenyls served as pseudosubstrates by effecting consumption of NADH and oxygen without being hydroxylated. Further degradation of 2,3-dihydroxy- and 2,2',3-trihydroxybiphenyl involved meta cleavage, with subsequent formation of benzoate and salicylate, respectively.