Deacetoxycephalosporin-C synthase (DAOCS) is a mononuclear ferrous enzyme that transforms penicillins into cephalosporins by inserting a carbon atom into the penicillin nucleus. In the first half-reaction, dioxygen and 2-oxoglutarate produce a reactive iron-oxygen species, succinate and CO2. The oxidizing iron species subsequently reacts with penicillin to give cephalosporin and water. Here we describe high-resolution structures for ferrous DAOCS in complex with penicillins, the cephalosporin product, the cosubstrate and the coproduct. Steady-state kinetic data, quantum-chemical calculations and the new structures indicate a reaction sequence in which a 'booby-trapped' oxidizing species is formed. This species is stabilized by the negative charge of succinate on the iron. The binding sites of succinate and penicillin overlap, and when penicillin replaces succinate, it removes the stabilizing charge, eliciting oxidative attack on itself. Requisite groups of penicillin are within 1 A of the expected position of a ferryl oxygen in the enzyme-penicillin complex.