Toluene/o-xylene monooxygenase hydroxylase (ToMOH), a diiron-containing enzyme, can activate dioxygen to oxidize aromatic substrates. To elucidate the role of a strictly conserved T201 residue during dioxygen activation of the enzyme, T201S, T201G, T201C, and T201V variants of ToMOH were prepared by site-directed mutagenesis. X-ray crystal structures of all the variants were obtained. Steady-state activity, regiospecificity, and single-turnover yields were also determined for the T201 mutants. Dioxygen activation by the reduced T201 variants was explored by stopped-flow UV-vis and Mossbauer spectroscopy. These studies demonstrate that the dioxygen activation mechanism is preserved in all T201 variants; however, both the formation and decay kinetics of a peroxodiiron(III) intermediate, T201(peroxo) were greatly altered, revealing that T201 is critically involved in dioxygen activation. A comparison of the kinetics of O-2 activation in the T201 S, T201 C, and T201G variants under various reaction conditions revealed that T201 plays a major role in proton transfer, which is required to generate the peroxodiiron(III) intermediate. A mechanism is postulated for dioxygen activation, and possible structures of oxygenated intermediates are discussed.