Involved in the regio- and stereoselective transformation of naphthalene to trans-1R-hydroxy-2R-glutathionyl-1,2-dihydronaphthalene in the presence of glutathione and glutathione S-transferases. It specifically catalyzes the production of a very reactive and potentially toxic intermediate, the 2R,2S arene oxide, that is associated with necrosis of the unciliated bronchiolar epithelial cells or Clara cells in lung. Belongs to the cytochrome P450 family.