Abstract Cyclosporins are a family of clinically-important immunosuppressive cyclic peptides produced by Tolypocladium inflatum. The structural modification of cyclosporins via hydroxylation at various positions of N-methyl leucines in cyclosporin A leads to a dramatic change of their bioactive spectra. Among over 100 soil actinomycetes screened, two actinomycetes species, Sebekia benihana and Pseudonocardia autotrophica, were identified to contain superior cyclosporin A hydroxylation activities. A HPLC-based cyclosporin A hydroxylation assay revealed that each strain possesses distinctive hydroxylation specificity and regiospecificity; mono-hydroxylation at the 4th N-methyl leucine of cyclosporin A by S. benihana, and di-hydroxylations at both 4th and 9th N-methyl leucines of cyclosporin A by P. autotrophica. The conversion yields for cyclosporin A hydroxylation by both S. benihana and P. autotrophica were significantly improved from less than 10% and 18% up to 58% and 45%, respectively, in the optimized culture containing molybdenum with 0.05 g/l of cyclosporin A concentration. An ancymidol-specific inhibition of cyclosporin hydroxylation also suggested that the regiospecific cyclosporin hydroxylation might be catalyzed by a putative cytochrome P450 mono-oxygenase enzyme.