Nonheme diiron enzymes activate dioxygen (O2) to affect various biochemical outcomes. HrmI, a member of the recently discovered and functionally versatile heme oxygenase-like dimetal oxidase/oxygenase (HDO) superfamily, catalyzes the N-oxygenation of L-Lysine to yield 6-nitronorleucine for the biosynthesis of the antibiotic hormaomycin. Unlike other characterized HDO N-oxygenases that have an additional carboxylate ligand thought to be key for regulating dioxygen activation and ensuing N-oxygenation, the predicted primary coordination sphere of HrmI resembles those of HDOs that instead perform C-C fragmentation of substrates. We show that diferrous HrmI reacts with O2 in a substrate-independent manner to form a presumptive μ-1,2 (Fe3+)2 peroxo (or P) intermediate common to the catalytic scheme of many HDOs. P is rapidly converted to a second species with both optical and Mössbauer properties that resemble an activated peroxodiferric adduct (P'). The substrate-dependent acceleration of P' decay suggests that it, rather than P, initiates l-Lysine metabolism. X-ray crystallographic studies of HrmI in several redox and ligand-bound states provide a stepwise view of structural changes during catalysis and, together with analytical approaches, capture a hydroxylamino metabolic intermediate en route to 6-nitronorleucine formation. The activation of peroxo species provides a key strategy that enables functional adaptation within the widely distributed HDO structural scaffold.