The system which employs iron, palladium, molecular oxygen and hydrogen as a model mono-oxygenase, has been investigated to develop a new method for selective cyclohexane oxidation uner mild conditions. This system provides much higher yield and selectivity for the formation of cyclohexanol and cyclohexanone compared to that of the existing industrial method. When the catalytic system, FeCl2-Pd/alumina, was employed, the oxidation system required acetone as a solvent to be efficient and acidifying the solvent by a little addition of acetic acid or HCl made the system more efficient. The Pd catalyst was recyclable without a significant deactivation but the recycling of ferrous chloride showed the decrease in the activity. On the other hand, the heterogeneous catalytic system, Pd/Fe2O3 could be recovered easily and reused after drying treatment.