Cytochrome P450cam is a heme-containing enzyme which catalyzes hydroxylation of d-camphor. The heme is bound in the heme pocket via noncovalent interactions, where two heme-propionate side chains interact with Arg, His, and/or Asp residues. To understand the role of the heme-7-propionate side chain, we prepared reconstituted P450cam with an artificial one-legged heme which has a methyl group at the position of the 7-propionate. Removal of 7-propionate dramatically decreases the d-camphor affinity by 3 orders of magnitude relative to that of the wild-type enzyme, and spectroscopic data indicate that 74% of the ferric P450cam exhibits a low-spin state owing to water molecule occupancy in the substrate-binding site under the normal assay conditions. Thus, the monooxygenase activity of the reconstituted protein is remarkably low due to the decrease in the rate of the first electron transfer from reduced putidaredoxin, whereas 87% of oxidized NADH was utilized to produce 5-hydroxy-d-camphor without any significant uncoupling reactions. X-ray structural analysis of the reconstituted enzyme reveals a novel water array extending from the substrate-binding site to bulk solvent through the position occupied by 7-propionate. This water array appears without causing any major changes in the protein structure with the notable exception of conformational changes occurring at Asp297 and Gln322 residues. We propose that the 7-propionate forms a barrier against entry of bulk water molecules and therefore in combination with Asp297, Arg299, and Gln322 plays an essential role in the process of elimination of the substrate-binding site water cluster which occurs upon d-camphor binding.