Dehaloperoxidase (DHP) from the terebellid polychaete Amphitrite ornata is a bifunctional enzyme that possesses both hemoglobin and peroxidase activities. Of the two DHP isoenzymes identified to date, much of the recent focus has been on DHP A, whereas very little is known pertaining to the activity, substrate specificity, mechanism of function, or spectroscopic properties of DHP B. Herein, we report the recombinant expression and purification of DHP B, as well as the details of our investigations into its catalytic cycle using biochemical assays, stopped-flow UV-visible, resonance Raman, and rapid freeze-quench electron paramagnetic resonance spectroscopies, and spectroelectrochemistry. Our experimental design reveals mechanistic insights and kinetic descriptions of the dehaloperoxidase mechanism which have not been previously reported for isoenzyme A. Namely, we demonstrate a novel reaction pathway in which the products of the oxidative dehalogenation of trihalophenols (dihaloquinones) are themselves capable of inducing formation of oxyferrous DHP B, and an updated catalytic cycle for DHP is proposed. We further demonstrate that, unlike the traditional monofunctional peroxidases, the oxyferrous state in DHP is a peroxidase-competent starting species, which suggests that the ferric oxidation state may not be an obligatory starting point for the enzyme. The data presented herein provide a link between the peroxidase and oxygen transport activities which furthers our understanding of how this bifunctional enzyme is able to unite its two inherent functions in one system.