Proximal hydrogen bonding of the axial sulfur with the backbone amides (NH-S) is a conserved feature of heme-thiolate enzymes such as chloroperoxidase (CPO) and cytochrome P450 (P450). In CPO, the effect of NH-S bonds is amplified by the dipole moment of the proximal helix. Our gas-phase DFT studies show that the proximal pocket effect significantly enhances CPO's reactivity toward the epoxidation of olefmic substrates. Comparison of models with and without proximal pocket residues shows that with them, the barrier for C-beta-O bond formation is lowered by about similar to 4.6 kcal/mol, while C-alpha-O-C-beta ring closure becomes barrierless. The dipole moment of the proximal helix was estimated to contribute 1/3 of the decrease, while the rest is attributed to the effect of NH-S bonds. The decrease of the reaction barrier correlates with increased electron density transfer to residues of the proximal pocket. The effect is most pronounced on the doublet spin surface and involves a change in the electron-transfer mechanism. A full enzyme QMMM study on the doublet spin surface gives about the same barrier as the gas-phase DFT study. The free-energy barrier was estimated to be in agreement with the experimental results for the CPO-catalyzed epoxidation of styrene.