Peptidylglycine alpha-amidating monooxygenase (PAM) is a bifunctional enzyme which catalyzes the post-translational modification of inactive C-terminal glycine-extended peptide precursors to the corresponding bioactive alpha-amidated peptide hormone. This conversion involves two sequential reactions both of which are catalyzed by the separate catalytic domains of PAM. The first step, the copper-, ascorbate-, and O-2-dependent stereospecific hydroxylation at the alpha-carbon of the C-terminal glycine, is catalyzed by peptidylglycine alpha-hydroxylating monooxygenase (PHM). The second step, the zinc-dependent dealkylation of the carbinolam de intermediate, is catalyzed by peptidylglycine amidoglycolate lyase. Quantum mechanical tunneling dominates PHM-dependent C-alpha-H bond activation. This study probes the substrate structure dependence of this chemistry using a set of N-acylglycine substrates of varying hydrophobicity. Primary deuterium kinetic isotope effects (KIEs), molecular mechanical docking, alchemical free energy perturbation, and equilibrium molecular dynamics were used to study the role played by ground-state substrate structure on PHM catalysis. Our data show that all N-acylglycines bind sequentially to PHM in an equilibrium-ordered fashion. The primary deuterium KIE displays a linear decrease with respect to acyl chain length for straight-chain N-acylglycine substrates. Docking orientation of these substrates displayed increased dissociation energy proportional to hydrophobic pocket interaction. The decrease in KIE with hydrophobicity was attributed to a preorganization event which decreased reorganization energy by decreasing the conformational sampling associated with ground state substrate binding. This is the first example of preorganization in the family of noncoupled copper monooxygenases.