We have reported the localization on yeast microsomes for a modified P450c27 (mic-P450c27) that contains the microsomal targeting signal of bovine P450c17 in front of the mature form of rat mitochondrial P450c27 (Sakaki, T., Akiyoshi-Shibata, M., Yabusaki, Y., and Ohkawa, H. (1992) J. Biol. Chem. 267, 16497-16502). In this study, we found that mic-P450c27 could be reduced by NADPH in the yeast microsomes without supplement of its physiological redox partners, adrenodoxin and NADPH-adrenodoxin reductase. In order to elucidate the direct electron transfer from NADPH-P450 reductase to mic-P450c27, we carried out simultaneous expression of mic-P450c27 and yeast P450 reductase. The reduction rate of mic-P450c27 was increased by overproduction of yeast P450 reductase, roughly in proportion to the reductase content in the microsomes. In addition, we constructed a fused enzyme between mic-P450c27 and yeast P450 reductase. The reduction rate of heme iron in the fused enzyme was too rapid to be measured. These recombinant yeast microsomes showed a notable 27-hydroxylation activity toward 5beta-cholestane-3alpha,7alpha, 12alpha-triol in the absence of adrenodoxin and adrenodoxin reductase. Finally, we purified mic-P450c27 from the recombinant yeast microsomes and reconstituted the hydroxylation system in liposomal membranes using the purified mic-P450c27 and yeast NADPH-P450 reductase. Mic-P450c27 was reduced by NADPH and showed its monooxygenase activity on the reconstituted system. Therefore, yeast NADPH-P450 reductase alone was found to transfer two electrons from NADPH to mic-P450c27. These results clearly show that mic-P450c27 not only localizes on the microsomes but also functions as a microsomal cytochrome P450 that accepts electrons from NADPH-P450 reductase.