Conversion in vitro of X-Gly to X-alpha-hydroxy-Gly or X--NH.sub.2 (X being a peptide or any other compound having a carbonyl group capable of forming a covalent bond with glycine) is accomplished enzymatically in the presence of keto acids, or salts or esters thereof, to provide a good yield without the necessity of catalase or similar enzymatic reaction enhancers. Peptidylglycine .alpha.-amidating monooxygenase (PAM) is a preferred enzyme for catalyzing the conversion. Alternatively, peptidylglycine .alpha.-hydroxylating monooxygenase (PHM) is utilized to convert X-Gly to X-alpha-hydroxy-Gly which may be recovered, or optionally may be simultaneously or sequentially converted to an amide by either a Lewis base or action of the enzyme peptidyl .alpha.-hydroxyglycine .alpha.-amidating lyase (PAL). Both PHM and PAL are functional domains of PAM.