C-1027 is a potent antitumor antibiotic composed of an apoprotein (CagA) and a reactive enediyne chromophore. The chromophore has four distinct chemical moieties, including an ( S)-3-chloro-5-hydroxy-beta-tyrosine moiety, the biosynthesis of which from l-alpha-tyrosine requires five proteins: SgcC, SgcC1, SgcC2, SgcC3, and SgcC4; a sixth protein, SgcC5, catalyzes the incorporation of this beta-amino acid moiety into C-1027. Biochemical characterization of SgcC has now revealed that (i) SgcC is a two-component, flavin adenine dinucleotide (FAD)-dependent monooxygenase, (ii) SgcC is only active with SgcC2 (peptidyl carrier protein)-tethered substrates, (iii) SgcC-catalyzed hydroxylation requires O 2 and FADH 2, the latter supplied by the C-1027 pathway-specific flavin reductase SgcE6 or Escherichia coli flavin reductase Fre, and (iv) SgcC efficiently catalyzes regioselective hydroxylation of 3-substituted beta-tyrosyl-S-SgcC2 analogues, including the chloro-, bromo-, iodo-, fluoro-, and methyl-substituted analogues, but does not accept 3-hydroxy-beta-tyrosyl-S-SgcC2 as a substrate. Together with the in vitro data for SgcC4, SgcC1, and SgcC3, the results establish that SgcC catalyzes the hydroxylation of ( S)-3-chloro-beta-tyrosyl-S-SgcC2 as the final step in the biosynthesis of the ( S)-3-chloro-5-hydroxy-beta-tyrosine moiety prior to incorporation into C-1027. SgcC now represents the first biochemically characterized two-component, FAD-dependent monooxygenase that acts on a carrier-protein-tethered aromatic substrate.