Unfolding converts Paracoccus versutus cytochrome c-550 into a potent peroxidase (Diederix, R. E. M.; Ubbink, M.; Canters, G. W. ChemBioChem 2002, 3, 110-112). The catalytic activity is accompanied by peroxide-driven inactivation that is prevented, in part, by reducing substrate. Here, the kinetics of inactivation are described, and evidence is presented for the occurrence of a labile intermediate on the catalytic peroxidase pathway of unfolded cytochrome c-550. This intermediate represents a branching point, whereby the protein proceeds along either the productive pathway or self-inactivates. Reducing substrate suppresses inactivation by decreasing the steady-state concentration of the labile intermediate. Inactivation is accompanied by heme degradation. Its chemical reactivity, UV-vis, and EPR properties identify the first intermediate as hydroxyheme-cytochrome c-550, i.e. with heme hydroxylated at one of the heme meso positions. The occurrence of this species argues for the peroxo-iron species in the peroxidase mechanism as the labile intermediate leading to inactivated cytochrome c-550.