The heme enzyme indoleamine 2,3-dioxygenase (IDO) was found to catalyze the oxidation of indole by H(2)O(2), with generation of 2- and 3-oxoindole as the major products. This reaction occurred in the absence of O(2) and reducing agents and was not inhibited by superoxide dismutase or hydroxyl radical scavengers, although it was strongly inhibited by L-Trp. The stoichiometry of the reaction indicated a one-to-one correspondence for the consumption of indole and H(2)O(2). The (18)O-labeling experiments indicated that the oxygen incorporated into the monooxygenated products was derived almost exclusively from H(2)(18)O(2), suggesting that electron transfer was coupled to the transfer of oxygen from a ferryl intermediate of IDO. These results demonstrate that IDO oxidizes indole by means of a previously unrecognized peroxygenase activity. We conclude that IDO inserts oxygen into indole in a reaction that is mechanistically analogous to the "peroxide shunt" pathway of cytochrome P450.