Lipid composition and macromolecular crowding are key external effectors of protein activity and stability whose role varies between different proteins. Therefore, it is imperative to study their effects on individual protein function. CYP2J2 is a membrane-bound cytochrome P450 in the heart involved in the metabolism of fatty acids and xenobiotics. In order to facilitate this metabolism, cytochrome P450 reductase (CPR), transfers electrons to CYP2J2 from NADPH. Herein, we use nanodiscs to show that lipid composition of the membrane bilayer affects substrate metabolism of the CYP2J2-CPR nanodisc (ND) system. Differential effects on both NADPH oxidation and substrate metabolism by CYP2J2-CPR are dependent on the lipid composition. For instance, sphingomyelin containing nanodiscs produced more secondary substrate metabolites than discs of other lipid compositions, implying a possible conformational change leading to processive metabolism. Furthermore, we demonstrate that macromolecular crowding plays a role in the lipid-solubilized CYP2J2-CPR system by increasing the K m and decreasing the V max , and effect that is size-dependent. Crowding also affects the CYP2J2-CPR-ND system by decreasing both the K m and V max for Dextran-based macromolecular crowding agents, implying an increase in substrate affinity but a lack of metabolism. Finally, protein denaturation studies show that crowding agents destabilize CYP2J2, while the multidomain protein CPR is stabilized. Overall, these studies are the first report on the role of the surrounding lipid environment and macromolecular crowding in modulating enzymatic function of CYP2J2-CPR membrane protein system. Additional Supporting Information may be found in the online version of this article. Statement of importance:This work is of interest to researchers studying macromolecular crowding, protein-lipid interactions, and cytochrome P450s. This work provides key insights into the kinetic effects of lipid composition as well as macromolecular crowding, a constant force within any cell. We also determine the effects of a crowded environment on membrane protein stability. As CYPs are important drug metabolizers, such data are pertinent to current and future studies.