A detailed electron paramagnetic resonance (EPR) and computational study of a key paramagnetic form of xanthine oxidase (XO) has been performed and serves as a basis for developing a valence bond description of C-H activation and transition-state (TS) stabilization along the reaction coordinate with aldehyde substrates. EPR spectra of aldehyde-inhibited XO have been analyzed in order to provide information regarding the relationship between the g, Mo-95,Mo-97 hyperfine (A(Mo)), and C-13 hyperfine (A(C)) tensors. Analysis of the EPR spectra has allowed for greater insight into the electronic origin of key delocalizations within the Mo-O-eq-C fragment and how these contribute to C-H bond activation/cleavage and TS stabilization. A natural bond orbital analysis of the enzyme reaction coordinate with aldehyde substrates shows that both Mo=S pi -> C-H sigma* (Delta E = 24.3 kcal mol(-1)) and C-H sigma -> Mo=S pi* (Delta E = 20.0 kcal mol(-1)) back-donation are important in activating the substrate C-H bond for cleavage. Additional contributions to C-H activation derive from O(eq)lp -> C-H sigma* (lp = lone pair; Delta E = 8.2 kcal mol(-1)) and S lp -> C-H sigma* (Delta E = 13.2 kcal mol(-1)) stabilizing interactions. The O-eq-donor ligand that derives from water is part of the Mo-O-eq-C fragment probed in the EPR spectra of inhibited XO, and the observation of O(eq)lp -> C-H sigma* back-donation indicates a key role for O-eq in activating the substrate C-H bond for cleavage. We also show that the O-eq donor plays an even more important role in TS stabilization. We find that O-eq -> Mo + C charge transfer dominantly contributes to stabilization of the TS (Delta E = 89.5 kcal mol(-1)) and the O-eq -> Mo-C delocalization pathway reduces strong electronic repulsions that contribute to the classical TS energy barrier. The O-eq -> Mo-C delocalization at the TS allows for the TS to be described in valence-bond terms as a resonance hybrid of the reactant (R) and product (P) valence-bond wave functions.