The site of oxygen binding during phenylalanine hydroxylase (PAH)-catalyzed turnover of phenylalanine to tyrosine has been tentatively identified as the 4a position of the tetrahydropterin cofactor, based on the spectral characteristics of an intermediate generated from both 6-methyltetrahydropterin and tetrahydrobiopterin during turnover. The rates of appearance of the intermediate and tyrosine are equal. Both rates exhibit the same dependence on enzyme concentration. PAH also requires 1.0 iron per 50,000-dalton subunit for maximal activity. A direct correlation between iron content and specific activity has been demonstrated. Apoenzyme can be reactivated by addition of Fe(II) aerobically or Fe(III) anaerobically and can be repurified to give apparently native protein. Evidence from electron paramagnetic resonance implicates the presence of high spin (5/2) Fe(III). As a working hypothesis we postulate that a key complex at the active site may be one containing iron in close proximity to a 4a-peroxytetrahydropterin.