Many peroxy-containing secondary metabolites have been isolated and shown to provide beneficial effects to human health. Yet, the mechanisms of most endoperoxide biosyntheses are not well understood. Although endoperoxides have been suggested as key reaction intermediates in several cases, the only well-characterized endoperoxide biosynthetic enzyme is prostaglandin H synthase, a haem-containing enzyme. Fumitremorgin B endoperoxidase (FtmOx1) from Aspergillus fumigatus is the first reported α-ketoglutarate-dependent mononuclear non-haem iron enzyme that can catalyse an endoperoxide formation reaction. To elucidate the mechanistic details for this unique chemical transformation, we report the X-ray crystal structures of FtmOx1 and the binary complexes it forms with either the co-substrate (α-ketoglutarate) or the substrate (fumitremorgin B). Uniquely, after α-ketoglutarate has bound to the mononuclear iron centre in a bidentate fashion, the remaining open site for oxygen binding and activation is shielded from the substrate or the solvent by a tyrosine residue (Y224). Upon replacing Y224 with alanine or phenylalanine, the FtmOx1 catalysis diverts from endoperoxide formation to the more commonly observed hydroxylation. Subsequent characterizations by a combination of stopped-flow optical absorption spectroscopy and freeze-quench electron paramagnetic resonance spectroscopy support the presence of transient radical species in FtmOx1 catalysis. Our results help to unravel the novel mechanism for this endoperoxide formation reaction.