Insight into the nature of oxygen activation in tryptophan hydroxylase has been obtained from density functional computations. Conformations of O2-bound intermediates have been studied with oxygen trans to glutamate and histidine, respectively. An O2-adduct with O2 trans to histidine (Ohis) and a peroxo intermediate with peroxide trans to glutamate (Pglu) were found to be consistent (0.57–0.59 mm/s) with experimental Mössbauer isomer shifts (0.55 mm/s) and had low computed free energies. The weaker trans influence of histidine is shown to give rise to a bent O2 coordination mode with O2 pointing towards the cofactor and a more activated O–O bond (1.33 Å) than in Oglu (1.30 Å). It is shown that the cofactor can hydrogen bond to O2 and activate the O–O bond further (from 1.33 to 1.38 Å). The Ohis intermediate leads to a ferryl intermediate (Fhis) with an isomer shift of 0.34 mm/s, also consistent with the experimental value (0.25 mm/s) which we propose as the structure of the hydroxylating intermediate, with the tryptophan substrate well located for further reaction 3.5 Å from the ferryl group. Based on the optimized transition states, the activation barriers for the two paths (glu and his) are similar, so a two-state scenario involving Ohis and Pglu is possible. A structure of the activated deoxy state which is high-spin implies that the valence electron count has been lowered from 18 to 16 (glutamate becomes bidentate), giving a “green light” that invites O2-binding. Our mechanism of oxygen activation in tryptophan hydroxylase does not require inversion of spin, which may be an important observation.