We present the first density functional theory study on alpha-ketoglutarate dependent halogenases and focus on the mechanism starting from the iron(IV)-oxo species. The studies show that the high-valent iron(IV)-oxo species reacts with substrates via an initial and rate determining hydrogen abstraction that is characterized by a large kinetic isotope effect (KIE) of 26.7 leading to a radical intermediate. This KIE value is in good agreement with experimental data. The reaction proceeds via two-state reactivity patterns on competing quintet and septet spin state surfaces with close lying hydrogen abstraction barriers. However, the septet spin radical intermediate gives very high barriers for hydroxylation and chlorination whereas the barriers on the quintet spin state surface are much lower. The calculations give extra information regarding the nature of the intermediates and a prediction of a new low-energy mechanism starting from the radical intermediate, whereby a waste product from an earlier step in the catalytic Cycle (CO2) is recycled and takes the hydroxyl radical away to form bicarbonate via an OH trapping mechanism. As a consequence, this mechanism prevents the occurrence of hydroxylated byproduct and gives a rationale for the sole observance of halogenated products. By contrast, a direct halogenation reaction cannot compete with hydroxylation due to higher reaction barriers. Our findings support experimental work in the field and give a rationale for the lack of hydroxylation products in alpha-ketoglutarate dependent halogenases.