We herein report the H2O2-dependent selective hydroxylation of naphthalene catalyzed by engineered P450BM3 with the assistance of dual-functional small molecules (DFSMs). The mutation at position 268 significantly improved the hydroxylation activity of P450BM3, which is quite different from those engineered P450BM3 peroxygenases and NADPH-dependent P450BM3 mutants previously reported, implicating the unique role of the residue at position 268. This study provides a potential approach to develop the practical hydroxylation biocatalyst of P450s for aromatic hydrocarbons using the DFSM-facilitated P450BM3-H2O2 system.