Biotransformation of endobiotics and xenobiotics essentially deals with modification of organic molecules by microbes ultimately to furnish useful drug intermediates and water soluble conjugates.The mechanism underlying the transformation mostly involves insertion of oxygen into the parent molecule catalysed by cyp450 monooxygenase i.e.conversion of hydrophobic to hydrophilic.The balance between oxidative detoxification and metabolic activation by this enzyme is critically important.Biotransformation got wide application in steroid and beta-lactams. Microbial management of environmental pollution is another area which attracts equal attention. Although biotransformation was initiated with liver microsomes but maximum feed back was received from procaryotes. The microbial biotechnology, considered as a green technology, is being equally used in food,health and environment sector.Science of metagenomics might be a boost in microbial biotechnology.