The stereospecific cytochrome P450-catalyzed hydroxylation of the C(5)-H((5-exo)) bond in camphor has been studied theoretically by a combined quantum mechanical/molecular mechanical (QM/MM) approach. Density functional theory is employed to treat the electronic structure of the active site (40-100 atoms), while the protein and solvent environment (ca. 24,000 atoms) is described by the CHARMM force field. The calculated energy profile of the hydrogen-abstraction oxygen-rebound mechanism indicates that the reaction takes place in two spin states (doublet and quartet), as has been suggested earlier on the basis of calculations on simpler models ("two-state reactivity"). While the reaction on the doublet potential energy surface is nonsynchronous, yet effectively concerted, the quartet pathway is truly stepwise, including formation of a distinct intermediate substrate radical and a hydroxo-iron complex. Comparative calculations in the gas phase demonstrate the effect of the protein environment on the geometry and relative stability of intermediates (in terms of spin states and redox electromers) through steric constraints and electronic polarization.