Many peroxy-containing secondary metabolites(1,2) have been isolated and shown to provide beneficial effects to human health(3-5). Yet, the mechanisms of most endoperoxide biosyntheses are not well understood. Although endoperoxides have been suggested as key reaction intermediates in several cases(6-8), the only well-characterized endoperoxide biosynthetic enzyme is prostaglandin H synthase, a haem-containing enzyme(9). Fumitremorgin B endoperoxidase (FtmOx1) from Aspergillus fumigatus is the first reported alpha-ketoglutarate-dependent mononuclear non-haem iron enzyme that can catalyse an endoperoxide formation reaction(10-12). To elucidate the mechanistic details for this unique chemical transformation, we report the X-ray crystal structures of FtmOx1 and the binary complexes it forms with either the co-substrate (alpha-ketoglutarate) or the substrate (fumitremorgin B). Uniquely, after alpha-ketoglutarate has bound to the mononuclear iron centre in a bidentate fashion, the remaining open site for oxygen binding and activation is shielded from the substrate or the solvent by a tyrosine residue (Y224). Upon replacing Y224 with alanine or phenylalanine, the FtmOx1 catalysis diverts from endoperoxide formation to the more commonly observed hydroxylation. Subsequent characterizations by a combination of stopped-flow optical absorption spectroscopy and freeze-quench electron paramagnetic resonance spectroscopy support the presence of transient radical species in FtmOx1 catalysis. Our results help to unravel the novel mechanism for this endoperoxide formation reaction.