The economy of dioxygen consumption by enzymes constitutes a fundamental problem in enzymatic chemistry (ref 1). Sometimes, the enzyme converts ALL the oxygen into water, without affecting the organic substrate, thereby acting as an "oxidase" (ref 1). Other times, the enzyme converts all the oxygen into water and causes desaturation in the substrate, thus exhibiting a mixed function as both "oxidase" and "dehydrogenase" (refs 2-5). The present paper describes density functional calculations demonstrating that the oxidase-dehydrogenase mixed activity occurs from the cationic intermediate species and requires electro-steric inhibition of the rebound process. Furthermore, the calculations reveal that the carbocation is formally nascent from an excited state of the active species of the enzyme (2Cpd I), in which the Fe=O moiety is singlet coupled as in the 1Deltag state of dioxygen! Thus, our results resolve an important mechanism and reveal the factors that underlie its observability.