CYP125 from Mycobacterium tuberculosis catalyzes sequential oxidation of the cholesterol side-chain terminal methyl group to the alcohol, aldehyde, and finally acid. Here, we demonstrate that CYP125 simultaneously catalyzes the formation of five other products, all of which result from deformylation of the sterol side chain. The aldehyde intermediate is shown to be the precursor of both the conventional acid metabolite and the five deformylation products. The acid arises by protonation of the ferric-peroxo anion species and formation of the ferryl-oxene species, also known as Compound I, followed by hydrogen abstraction and oxygen transfer. The deformylation products arise by addition of the same ferric-peroxo anion to the aldehyde intermediate to give a peroxyhemiacetal that leads to C-C bond cleavage. This bifurcation of the catalytic sequence has allowed us to examine the effect of electron donation by the proximal ligand on the properties of the ferric-peroxo anion. Replacement of the cysteine thiolate iron ligand by a selenocysteine results in UV-vis, EPR, and resonance Raman spectral changes indicative of an increased electron donation from the proximal selenolate ligand to the iron. Analysis of the product distribution in the reaction of the selenocysteine substituted enzyme reveals a gain in the formation of the acid (Compound 1 pathway) at the expense of deformylation products. These observations are consistent with an increase in the pK(a) of the ferric-peroxo anion, which favors its protonation and, therefore, Compound I formation.