Cytochrome P450 enzymes are renowned for their ability to insert oxygen into an enormous variety of compounds with a high degree of chemo- and regio-selectivity under mild conditions. This property has been exploited in Nature for an enormous variety of physiological functions, and representatives of this ancient enzyme family have been identified in all kingdoms of life. The catalytic versatility of P450s makes them well suited for repurposing for the synthesis of fine chemicals such as drugs. Although these enzymes have not evolved in Nature to perform the reactions required for modern chemical industries, many P450s show relaxed substrate specificity and exhibit some degree of activity towards non-natural substrates of relevance to applications such as drug development. Directed evolution and other protein engineering methods can be used to improve upon this low level of activity and convert these promiscuous generalist enzymes into specialists capable of mediating reactions of interest with exquisite regio- and stereo-selectivity. Although there are some notable successes in exploiting P450s from natural sources in metabolic engineering, and P450s have been proven repeatedly to be excellent material for engineering, there are few examples to date of practical application of engineered P450s. The purpose of the present review is to illustrate the progress that has been made in altering properties of P450s such as substrate range, cofactor preference and stability, and outline some of the remaining challenges that must be overcome for industrial application of these powerful biocatalysts.