We determined the enzymatic characteristics of an industrially important biocatalyst, α-ketoglutarate-dependent l-isoleucine dioxygenase (IDO), which was found to be the enzyme responsible for the generation of (2S,3R,4S)-4-hydroxyisoleucine in Bacillus thuringiensis 2e2. Depending on the amino acid used as the substrate, IDO catalyzed three different types of oxidation reactions: hydroxylation, dehydrogenation, and sulfoxidation. IDO stereoselectively hydroxylated several hydrophobic aliphatic l-amino acids, as well as l-isoleucine, and produced (S)-3-hydroxy-l-allo-isoleucine, 4-hydroxy-l-leucine, (S)-4-hydroxy-l-norvaline, 4-hydroxy-l-norleucine, and 5-hydroxy-l-norleucine. The IDO reaction product of l-isoleucine, (2S,3R,4S)-4-hydroxyisoleucine, was again reacted with IDO and dehydrogenated into (2S,3R)-2-amino-3-methyl-4-ketopentanoate, which is also a metabolite found in B. thuringiensis 2e2. Interestingly, IDO catalyzed the sulfoxidation of some sulfur-containing l-amino acids and generated l-methionine sulfoxide and l-ethionine sulfoxide. Consequently, the effective production of various modified amino acids would be possible using IDO as the biocatalyst.