Cytochrome P450 enzymes (P450s) are broadly distributed among living organisms and play crucial roles in natural product biosynthesis, degradation of xenobiotics, steroid biosynthesis, and drug metabolism. P450s are considered as the most versatile biocatalysts in nature because of the vast variety of substrate structures and the types of reactions they catalyze. In particular, P450s can catalyze regio- and stereoselective oxidations of nonactivated C–H bonds in complex organic molecules under mild conditions, making P450s useful biocatalysts in the production of commodity pharmaceuticals, fine or bulk chemicals, bioremediation agents, flavors, and fragrances. Major efforts have been made in engineering improved P450 systems that overcome the inherent limitations of the native enzymes. In this review, we focus on recent progress of different strategies, including protein engineering, redox-partner engineering, substrate engineering, electron source engineering, and P450-mediated metabolic engineering, in efforts to more efficiently produce pharmaceuticals and other chemicals. We also discuss future opportunities for engineering and applications of the P450 systems.