Insects experience a wide array of chemical pressures from plant allelochemicals and pesticides and have developed several effective counterstrategies to cope with such toxins. Among these, cytochrome P450 monooxygenases are crucial in plant-insect interactions. Flavin-dependent monooxygenases (FMOs) seem not to play a central role in xenobiotic detoxification in insects, in contrast to mammals. However, the previously identified senecionine N-oxygenase of the arctiid moth Tyria jacobaeae (Lepidoptera) indicates that FMOs have been recruited during the adaptation of this insect to plants that accumulate toxic pyrrolizidine alkaloids. Identification of related FMO-like sequences of various arctiids and other Lepidoptera and their combination with expressed sequence tag (EST) data and sequences emerging from the Bombyx mori genome project show that FMOs in Lepidoptera form a gene family with three members (FMO1 to FMO3). Phylogenetic analyses suggest that FMO3 is only distantly related to lepidopteran FMO1 and FMO2 that originated from a more recent gene duplication event. Within the FMO1 gene cluster, an additional gene duplication early in the arctiid lineage provided the basis for the evolution of the highly specific biochemical, physiological, and behavioral adaptations of these butterflies to pyrrolizidine-alkaloid-producing plants. The genes encoding pyrrolizidine-alkaloid-N-oxygenizing enzymes (PNOs) are transcribed in the fat body and the head of the larvae. An N-terminal signal peptide mediates the transport of the soluble proteins into the hemolymph where PNOs efficiently convert pro-toxic pyrrolizidine alkaloids into their non-toxic N-oxide derivatives. Heterologous expression of a PNO of the generalist arctiid Grammia geneura produced an N-oxygenizing enzyme that shows noticeably expanded substrate specificity compared with the related enzyme of the specialist Tyria jacobaeae. The data about the evolution of FMOs within lepidopteran insects and the functional characterization of a further member of this enzyme family shed light on this almost uncharacterized detoxification system in insects.