Androstenedione (AD) is a vital intermediate in the synthesis of steroid drugs, making its efficient production critical in the steroid drug industry. Acetyl-CoA acetyltransferase (FadA5), a thiolase enzyme, plays an important role in the metabolic process of degrading phytosterol side chains in Mycolicibacterium to produce AD. This work is the first systematic analysis of the role of FadA5 in the transformation of phytosterols by Mycolicibacterium to produce AD. The relationship between redox potential and AD production was examined using resting cells, and it was confirmed that FadA5 is a key enzyme for AD production. Mutating the 87th cysteine of FadA5 to alanine reduced its redox effect, enhancing the substrate tolerance and biotransformation capacity of the strain. Co-expressing Vitreoscilla hemoglobin (VHb) and propionyl-CoA metabolized the transcription activator (PrpR), decreased intracellular reactive oxygen species levels, and improved cell viability. The AD yield of MSP-fA5C87A-VP/ΔfA5 was 2.541 g/L, an increase of 16.83% over the control strain. Using a repeated batch fermentation process, the production efficiency of the MSP-fA5C87A-VP/ΔfA5 strain was 0.658 g/L/d, which was 1.82 times higher than that of the control strain. These findings provide a theoretical basis for understanding and regulating steroid side-chain catabolism in Mycolicibacterium and offer support for the rational modification of industrial strains for steroidal drug precursor production.