Lysine dioxygenase (KDO) is an important enzyme in human physiology involved in bioprocesses that trigger collagen cross-linking and blood pressure control. There are several KDOs in nature; however, little is known about the factors that govern the regio- and stereoselectivity of these enzymes. To understand how KDOs can selectively hydroxylate their substrate, we did a comprehensive computational study into the mechanisms and features of 4-lysine dioxygenase. In particular, we selected a snapshot from the MD simulation on KDO5 and created large QM cluster models (A, B, and C) containing 297, 312, and 407 atoms, respectively. The largest model predicts regioselectivity that matches experimental observation with rate-determining hydrogen atom abstraction from the C4-H position, followed by fast OH rebound to form 4-hydroxylysine products. The calculations show that in model C, the dipole moment is positioned along the C4-H bond of the substrate and, therefore, the electrostatic and electric field perturbations of the protein assist the enzyme in creating C4-H hydroxylation selectivity. Furthermore, an active site Tyr233 residue is identified that reacts through proton-coupled electron transfer akin to the axial Trp residue in cytochrome c peroxidase. Thus, upon formation of the iron(IV)-oxo species in the catalytic cycle, the Tyr233 phenol loses a proton to the nearby Asp179 residue, while at the same time, an electron is transferred to the iron to create an iron(III)-oxo active species. This charged tyrosyl residue directs the dipole moment along the C4-H bond of the substrate and guides the selectivity to the C4-hydroxylation of the substrate.