p-Hydroxybenzoate hydroxylase (EC 1.14.13.2) from Pseudomonas fluorescens catalyzes in vivo the hydroxylation of p-hydroxybenzoate by molecular oxygen to form 3,4-dihydroxybenzoate. p-Mercaptobenzoate is also a substrate of the enzyme, but instead of being converted to the expected product, 3-hydroxy-4-mercaptobenzoate, the disulfide, 4,4'-dithiobisbenzoate, is formed. To find what mechanistic information this unusual reaction provided, steady state kinetic analyses, combined with rapid reaction studies of the changes in the enzyme-bound FAD, were carried out with the separate half-reactions involved in catalysis. Most of the kinetic measurements were made with a stopped-flow spectrophotometer designed for working anaerobically and connected on line to a minicomputer. Initial rate studies, upon varying systematically the concentrations of p-mercaptobenzoate, NADPH, and oxygen showed that the enzyme interacted with the substrates in the same manner as it does with p-hydroxybenzoate in place of the mercaptan. That is, a ternary complex is formed between enzyme, mercaptobenzoate, and NDAPH, followed by reaction and release of NADP+. Then a second ternary complex is formed between enzyme, mercaptobenzoate, and oxygen followed by reaction, liberation of product, and return to the resting state of the enzyme. Rapid reaction studies showed that the first half-reaction was analagous to that with the natural substrate. The enzyme-flavin is reduced to the 1,5-dihydroflavin by NADPH, and the rate of reaction is dramatically enhanced in the presence of mercaptobenzoate. The rate enhancement with this enzyme correlates well with the presence of a dianion form of the substrate on the enzyme. Examination of the second half-reaction showed that the reduced flavin on the enzyme formed transient intermediates upon reaction with oxygen, which were analogous to the intermediates in reactions where the enzyme forms an hydroxylated product. The oxidation of p-mercaptobenzoate by H2O2 in free solution resulted in the same disulfide as formed in the enzymatic reaction, only orders of magnitude slower. A sulfenic acid was probably the initial oxidation product from p-mercaptobenzoate, and this reacted very fast, and nonenzymatically, with mercaptobenzoate to form the disulfide and H20. The significance of the enzyme reaction with oxygen when complexed with p-mercaptobenzoate is discussed in relation to the mechanism of hydroxylation.