Tryptophan 2,3-dioxygenase (TDO) and indoleamine 2,3-dioxygenase (IDO) constitute an important, yet relatively poorly understood, family of heme-containing enzymes. Here, we report extensive structural and biochemical studies of the Xanthomonas campestris TDO and a related protein SO4414 from Shewanella oneidensis, including the structure at 1.6-A resolution of the catalytically active, ferrous form of TDO in a binary complex with the substrate L-Trp. The carboxylate and ammonium moieties of tryptophan are recognized by electrostatic and hydrogen-bonding interactions with the enzyme and a propionate group of the heme, thus defining the L-stereospecificity. A second, possibly allosteric, L-Trp-binding site is present at the tetramer interface. The sixth coordination site of the heme-iron is vacant, providing a dioxygen-binding site that would also involve interactions with the ammonium moiety of L-Trp and the amide nitrogen of a glycine residue. The indole ring is positioned correctly for oxygenation at the C2 and C3 atoms. The active site is fully formed only in the binary complex, and biochemical experiments confirm this induced-fit behavior of the enzyme. The active site is completely devoid of water during catalysis, which is supported by our electrochemical studies showing significant stabilization of the enzyme upon substrate binding.