The anticancer molecule taxol (Paclitaxel) stands as one of the most medically and economically important natural products. However, despite decades of extensive study, its biosynthesis remains poorly understood. Unpredictable behavior of the first oxygenation enzyme, taxadiene-5α-hydroxylase, which produces a range of undesired products, currently stands as a key bottleneck to improved taxol production. We herein present chemical and biological evidence of an unreported epoxidase activity of taxadiene-5α-hydroxylase that puts into question the previously proposed radical-rebound mechanism. We demonstrate that the poor selectivity of taxadiene-5α-hydroxylase arises from nonselective degradation of an epoxide intermediate produced via a selective oxidation step, rather than from promiscuous oxidation, as previously proposed. We support these conclusions by demonstrating variable enzyme behavior in differing hosts and conditions, similarity of products and product ratios generated from chemical epoxidation, and taxadiene-5α-hydroxylase, and differing enzymatic activity on alternative taxadiene isomers. Additionally, we use directed mutagenesis to describe the oxidizing species of the P450, demonstrate that further in vivo functionalization of oxidized taxadiene is unable to improve selectivity of the oxidation, and show that multiple products are produced in the Taxus cuspidata and are not simply an artifact of heterologous expression. Our results highlight an important, and previously unknown, obstacle to improved taxol production. We further offer insights to overcome the challenges posed by an epoxide-mediated reaction, which sets the basis for further engineering of taxol biosynthesis.