Determination of the mechanism of dioxygen activation by flavoenzymes remains one of the most challenging problems in flavoenzymology for which the underlying theoretical basis is not well understood. Here, the reaction of reduced flavin and dioxygen catalyzed by pyranose 2-coddase (P2O), a flavoenzyme oxidase that is unique in its formation of C4a-hydroperoxyflavin, was investigated by density functional calculations, transient kinetics, and site-directed mutagenesis. Based on work from the 1970s-1980s, the current understanding of the dioxygen activation process in flavoenzymes is believed to involve electron transfer from flavin to dioxygen and subsequent proton transfer to form C4a-hydroperoxyflavin. Our findings suggest that the first step of the P2O reaction is a single electron transfer coupled with a proton transfer from the conserved residue, His548. In fact, proton transfer enhances the electron acceptor ability of dioxygen. The resulting center dot OOH of the open-shell diradical pair is placed in an optimal position for the formation of C4a-hydroperoxyflavin. Furthermore, the C4a-hydroperoxyllavin is stabilized by the side chains of Thr169, His548, and Asn593 in a "face-on" configuration where it can undergo a unimolecular reaction to generate H2O2 and oxidized flavin. The computational results are consistent with kinetic studies of variant forms of P2O altered at residues Thr169, His548, and Asn593, and kinetic isotope effects and pH-dependence studies of the wild-type enzyme. In addition, the calculated energy barrier is in agreement with the experimental enthalpy barrier obtained from Eyring plots. This work revealed new insights into the reaction of reduced.flavin with dioxygen, demonstrating that the positively charged residue (His548) plays a significant role in catalysis by providing a proton for a proton-coupled electron transfer in dioxygen activation. The interaction around the NS-position of the C4a-hydroperoxyflavin is important for dictating the stability of the intermediate.