We have reported recently the identification and characterization of the last three mitochondrial cytochrome P450 enzymes (CYP) controlling the biosynthesis of 20-hydroxyecdysone, the molting hormone of insects. These are encoded by the following genes: disembodied (dib, Cyp302a1, the 22-hydroxylase); shadow (sad, Cyp315a1, the 2-hydroxylase); and shade (shd, Cyp314a1, the 20-hydroxylase). Employing similar gene identification and transfection techniques and subsequent biochemical analysis of the expressed enzymatic activity, we report the identity of the Drosophila gene phantom (phm), located at 17D1 of the X chromosome, as encoding the microsomal 25-hydroxylase (Cyp306a1). Similar analysis following differential display-based gene identification has also resulted in the characterization of the corresponding 25-hydroxylase gene in Bombyx mori. Confirmation of 2,22,25-trideoxyecdysone (3beta,5beta-ketodiol) conversion to 2,22-dideoxyecdysone (3beta,5beta-ketotriol) mediated by either Phm enzyme employed LC, MS and definitive NMR analysis. In situ developmental gene analysis, in addition to northern, western and RT-PCR techniques during Drosophila embryonic, larval and adult development, are consistent with this identification. That is, strong expression of phm is restricted to the prothoracic gland cells of the Drosophila larval ring gland, where it undergoes dramatic changes in expression, and in the adult ovary, but also in the embryonic epidermis. During the last larval-larval transition in Bombyx, a similar expression pattern in the prothoracic gland is observed, but as in Drosophila, slight expression is also present in other tissues, suggesting a possible additional role for the phantom enzyme.