Conversion of heme to verdoheme by heme oxygenase-1 (HO-1) is thought to involve alpha-meso-hydroxylation and elimination of the meso-carbon as CO, a reaction supported by both H2O2 and NADPH-cytochrome P450 reductase/O2. Anaerobic reaction of the heme-HO-1 complex with 1 eq of H2O2 produces an enzyme-bound intermediate identified by spectroscopic methods as alpha-meso-hydroxyheme. This is the first direct evidence for HO-1-catalyzed formation of alpha-meso-hydroxyheme. alpha-meso-Hydroxyheme exists as a mixture of Fe(III) phenolate, Fe(III) keto anion, and Fe(II) keto pi neutral radical resonance structures. EPR shows that complexation with CO enhances the Fe(II) pi neutral radical component. Reaction of the alpha-meso-hydroxyheme-HO-1 complex with O2 generates Fe(III) verdoheme, which can be reduced in the presence of CO to the Fe(II) verdoheme-CO complex. Thus, conversion of alpha-meso-hydroxyheme to Fe(III) verdoheme, in contrast to a previous report (Matera, K. M., Takahashi, S., Fujii, H., Zhou, H., Ishikawa, K., Yoshimura, T., Rousseau, D. L., Yoshida, T., and Ikeda-Saito, M. (1996) J. Biol. Chem. 271, 6618-6624), does not require a reducing equivalent. An electron is only required to reduce ferric to ferrous verdoheme in the first step of its conversion to biliverdin.