A soluble alpha-ketoisocaproate oxygenase from rat liver catalyzes the decarboxylation and hydroxylation of alpha-ketoisocaproate to form beta-hydroxyisovalerate. The source of oxygen (O2 or H2O) enzymatically incorporated into beta-hydroxyisovalerate was investigated using 18O2 and H218O. Greater than 92% of the carboxyl groups of beta-hydroxyisovaleric acid contained 1 18O atom from 18O2 and 15% of the beta-hydroxyl oxygens of beta-hydroxyisovaleric acid contained 18O from 18O2. Since some oxygen of the beta-hydroxyl group is derived from O2 and since others have shown a rapid H2O in equilibrium ROH exchange for similar reactions, we conclude that both of the oxygens of beta-hydroxyisovaleric acid are derived from O2 and that exchange of water oxygen with the beta-hydroxyl group of beta-hydroxyisovaleric acid must occur with an intermediate of the reaction. Thus, the alpha-ketoisocaproate oxygenase would be a dioxygenase. A mechanism consistent with the 18O experiments and other properties of the enzyme is proposed.