The crystal structures of substrate-free and all-trans-retinoic acid-bound CYP120A1 from Synechocystis sp. PCC 6803 were determined at 2.4 and 2.1 Å resolution, respectively, representing the first structural characterization of a cyanobacterial P450. Features of CYP120A1 not observed in other P450 structures include an aromatic ladder flanking the channel leading to the active site and a tripleglycine motif within SRS5. Using spectroscopic methods, CYP120A1 is shown to bind 13-cis-retinoic acid, 9-cis-retinoic acid, and retinal with high affinity and dissociation constants of less than 1 μM. Metabolism of retinoic acid by CYP120A1 suggests that CYP120A1 hydroxylates a variety of retinoid derivatives in vivo. On the basis of the retinoic acid-bound CYP120A1 crystal structure, we propose that either carbon 2 or the methyl groups (C16 or C17) of the β-ionone ring are modified by CYP120A1.