Two monooxygenases MO1 (NADH dependent) and MO2 (NADPH dependent) isolated from Ps. putida NCIMB 10007 [grown on (+)-camphor] have been utilized as biocatalysts in Baeyer–Villiger oxidations. The former enzyme oxidized the racemic ketones 9, 10 and 14 into the optically active lactones 15–17. The ketone 9 is not oxidized by MO2 but the ketones 10 and 14 gave the optically active lactones 16 and 17. Whole-cell preparations of Ps. putida degraded the ketone 9 but transformed the racemic ketones 10 and 14 into the optically active lactones 16 and 17. All the lactones possess the same absolute configuration: 1S, 5S, 6R. (+)-MO1 [the isozyme which metabolizes (+)-camphor], oxidized the ketone 10 but not the ketone 9. Conversely, (–)-MO1 [the isozyme which metabolizes (–)-camphor], catalysed the oxidation of the ketone 9 but not the ketone 10. Co-factor recycling was effected using dehydrogenase enzymes in preparative-scale experiments. The optically active lactone 17 is an intermediate in the synthesis of compound 5, an important precursor of azadirachtin 6.