The title enzyme, peptidylglycine alpha-hydroxylating monooxygenase (PHM), is essential to the in vivo generation of a wide variety of physiologically significant alpha-amidated peptide hormones from the corresponding C-terminal glycine-extended prohormones. Over a 20-year period of time a massive amount of experimental information about the enzyme has accumulated, but its mechanism of action has remained obscure. A major stumbling block to proposed mechanisms is the fact that the two copper atoms found in the active site are fixed 11 A apart. A novel mechanism is now proposed which accommodates and, indeed, requires this separation and proceeds through energetically accessible steps. It is proposed that hydroxylation at the terminal glycine residue of the C-terminal glycine-extended prohormone proceeds first by a concerted sequence of single-electron electromeric shifts, whereby both copper atoms are oxidized to Cu(II), oxygen is reduced to peroxide coordinated to Cu(M), and the glycyl group is tautomerized to its enolate coordinately bound to Cu(H). Upon subsequent reversion to the carbonyl tautomer, by a sequence of two-electron shifts, the enolate as nucleophile reacts with peroxide as electrophile, generating product alpha-hydroxyglycine, decoordinated from Cu(H), reopening the mouth of the active-site pocket to egress of product and ingress of substrates.