We demonstrate by QM/MM calculations that the formation of Compound 0, an intermediate in the catalytic cycle of horseradish peroxidase, is catalyzed by a single water molecule, which relays proton transfer between the substrate (H2O2) and the acceptor (His42). Thus, a single water molecule enhances the thermodynamic and kinetic acidities of H2O2 by many orders of magnitude. The behavior of the water molecule during the activation of H2O2 may account for the experimental reports of extensive entropic effects during the formation of the principal active species of the enzyme Compound I.