Theory predicts herein enzymatic activity from scratch. We show that molecular dynamics (MD) simulations and quantum-mechanical/molecular mechanics (QM/MM) calculations of the fatty acid hydroxylase P450 BM3 predict the binding mechanism of the fatty acid substrate and its enantio/regioselective hydroxylation by the active species of the enzyme, Compound I. The MD simulations show that the substrates entrance involves hydrogen-bonding interactions with Pro25, Glu43, and Leu188, which induce a huge conformational rearrangement that closes the substrate channel by pulling together the A helix and the beta(1) sheet to the F/G loop. In turn, at the bottom of the substrates channel, residue Phe87 controls the regioselectivity by causing the substrates chain to curl up and juxtapose its CH2 positions omega-1/omega-2/omega-3 to Compound I while preventing access to the endmost position, omega-CH3. Phe87 also controls the stereoselectivity by the enantioselective steric blocking of the pro-S C-H bond, thus preferring R hydroxylation. Indeed, the MD simulations of the mutant Phe87Ala predict predominant omega hydroxylation. These findings, which go well beyond the X-ray structural data, demonstrate the predictive power of theory and its insight, which can potentially be used as a partner of experiment for eventual engineering of P450 BM3 with site-selective C-H functionalization capabilities.