Cytochrome P450 (CYP450) enzymes, as versatile biocatalysts with the broadest range of catalytic reactions in nature, play critical roles in the metabolism of medicinal plants. They are involved in various oxidative modification processes of active ingredients, facilitating both the synthesis and degradation of bioactive substances. This review delves into the classification, structure, and catalytic mechanisms of CYP450 enzymes, emphasizing their indispensable roles in plant biosynthesis. Using representative cases, including the biosynthetic pathways of tanshinones, artemisinin, celastrol, paclitaxel, and berberine, this review highlights the functional importance of specific CYP450s. For instance, CYP71AV1 catalyzes the production of artemisinin and artemisinic aldehyde, with its activity directly affecting artemisinin yield. Similarly, CYP76AH1 and CYP76AK1 play pivotal roles in the backbone construction and postmodification of tanshinones, acting as key players in their metabolic network. In the case of celastrol, CYP712K1, CYP712K2, and CYP712K3 initiate the first oxidative reaction, providing a solid foundation for subsequent biosynthetic processes. These examples highlight the pivotal role of CYP450 enzymes in the biosynthesis of medicinal plants, showcasing both their complexity and significance in plant metabolic pathways. Furthermore, this review examines the oxidative metabolism of CYP450 enzymes under aerobic conditions and their reductive metabolism in specific environments, offering deeper insights into their catalytic mechanisms. A comprehensive understanding of these processes lays the groundwork for the effective application of CYP450 enzymes in biotechnology and plant metabolic engineering.