Des2 (degenerative spermatocyte 2) is a bifunctional enzyme that produces phytoceramide and ceramide from dihydroceramide. The molecular mechanism involved in C-4-hydroxylation has not been studied in detail. In the present paper, we report that C-4-hydroxylation requires an electron-transfer system that includes cytochrome b₅ and that the hydroxylase activity is reconstituted in an in vitro assay with purified recombinant Des2. FLAG-tagged mouse Des2 was expressed in insect Sf9 cells and was purified by solubilization with digitonin and anti-FLAG antibody affinity column chromatography. The activity of dihydroceramide:sphinganine C-4-hydroxylase was reconstituted with the purified FLAG–Des2, mb₅ (the membrane form of cytochrome b₅) and bovine erythrocyte membrane. The apparent K_m and V_max of Des2 for the substrate N-octanoylsphinganine were 35 μM and 40 nmol·h⁻¹·mg of protein⁻¹ respectively. The K_m of the hydroxylase for mb₅ was 0.8 μM. Interestingly, mb₅ was not replaced with the soluble form of cytochrome b₅, which lacks the C-terminal membrane-spanning domain. The erythrocyte membrane was separated into Triton X-100-soluble and -insoluble fractions, and the detergent-soluble fraction was replaced by the soluble or membrane form of b₅R (NADH-cytochrome b₅ reductase). The Triton-X-100-insoluble fraction contained trypsin-resistant factors. The Des2 protein is found in the endoplasmic reticulum and is assumed to have three membrane-spanning domains. The findings of the present study indicate that the hydroxylation requires complex formation between Des2 and mb₅ via their membrane-spanning domains and electron transfer from NADH to the substrate via the reduction of mb₅ by b₅R.