A sterically demanding molybdenum(VI) dioxo complex was found to catalytically activate molecular oxygen and to transfer its oxygen atoms to phosphines. Intermediate peroxo as well as reduced mono-oxo complexes were isolated and fully characterized. Monomeric Mo(IV) monooxo species proved to be of an unusual nature with the coordinated phosphine trans to the oxo group. The reduced molybdenum centers can activate O2 to form a stable Mo(VI) oxo-peroxo complex unambiguously characterized by single crystal X-ray diffraction analysis. NMR experiments demonstrate that both oxygen atoms of the peroxo unit are transferred to an accepting substrate, generating the Mo(IV) intermediate and restarting the catalytic cycle.