We have investigated the reaction of PHM with hydrogen peroxide to determine whether Cu(II)-peroxo is a likely intermediate. When the oxidized enzyme was reacted with the dansyl-YVG substrate and H₂O₂, the -hydroxyglycine product was formed. The reaction was catalytic and did not require the presence of additional reductant. When ¹⁸O-labeled H₂O₂ was reacted with PHM and substrate anaerobically, O in the product was labeled with [super18}O and must therefore be derived from H₂O₂. However, when the reaction was carried out with H₂¹⁶O₂ in the presence of ¹⁸O₂, 60 percent of the product contained the ¹⁸O label. Therefore, the reaction must proceed via an intermediate that can react directly with dioxygen, and thus scramble the label. Under strictly anaerobic conditions (in the presence of glucose and glucose oxidase where no oxygen was released into the medium from non-enzymatic peroxide decomposition), product formation and peroxide consumption were tightly coupled and the rate of product formation was identical to that measured under aerobic conditions. Peroxide reactivity was eliminated by a mutation at the Cu_H center which should not be involved in the peroxide shunt. Our data lend support to recent proposals that Cu(II)-superoxide is the active species.