The signature feature of the enzymatic cycle of the peroxidase family of metabolizing heme proteins is formation of the catalytically active compound I species from the inactive ferric resting form, via a putative transient peroxide bound intermediate. While there is some evidence for this intermediate, the mechanism of formation of compound I from it and the role of nearby amino acids in facilitating it are still unresolved. To further probe this mechanism and investigate the possible role of the protein in compound I formation, molecular dynamics simulations of the peroxide bound complex of horseradish peroxidase isoenzyme C (HRP-C-HOOK) were performed. For such a typical peroxidase, a role of two conserved amino acids in the distal binding pocket, histidine and arginine, has been suggested in facilitating the peroxide O-O bond cleavage necessary for compound I formation. Since HRP functions cover a wide range of pH values, protein simulations were carried out for two models differing only in the state of protonation of the conserved histidine. The neutral histidine corresponds to a high-pH model, and the cationic histidine corresponds to a low-pH model. The unique robust H bonds identified in the molecular dynamics simulations of the two models suggest two different modes of binding of the peroxide to the heme iron, different mechanisms of compound I formation, and a different role for the key HRP residues involved in its formation in the two models.