Benzene hydroxylation is a fundamental process in chemical catalysis. In nature, this reaction is catalyzed by the enzyme cytochrome P450 via oxygen transfer in a still debated mechanism of considerable complexity. The paper uses hybrid density functional calculations to elucidate the mechanisms by which benzene is converted to phenol, benzene oxide, and ketone, by the active species of the enzyme, the high-valent iron-oxo porphyrin species. The effects of the protein polarity and hydrogen-bonding donation to the active species are mimicked, as before (Ogliaro, F.; Cohen, S.; de Visser, S. P.; Shaik, S. J. Am. Chem. Soc. 2000, 122, 12892-12893). It is verified that the reaction does not proceed either by hydrogen abstraction or by initial electron transfer (Ortiz de Montellano, P. R. In Cytochrome P450: Structure, Mechanism and Biochemistry, 2nd ed.; Ortiz de Montellano, P. R., Ed.; Plenum Press: New York, 1995; Chapter 8, pp 245-303). In accord with the latest experimental conclusions, the theoretical calculations show that the reactivity is an interplay of electrophilic and radicalar pathways, which involve an initial attack on the pi-system of the benzene to produce sigma-complexes (Korzekwa, K. R.; Swinney, D. C.; Trager, W. T. Biochemistry 1989, 28, 9019-9027). The dominant reaction channel is electrophilic and proceeds via the cationic sigma-complex,( 2)3, that involves an internal ion pair made from a cationic benzene moiety and an anionic iron porphyrin. The minor channel proceeds by intermediacy of the radical sigma-complex, (2)2, in which the benzene moiety is radicalar and the iron-porphyrin moiety is neutral. Ring closure in these intermediates produces the benzene oxide product ((2)4), which does not rearrange to phenol ((2)7) or cyclohexenone ((2)6). While such a rearrangement can occur post-enzymatically under physiological conditions by acid catalysis, the computations reveal a novel mechanism whereby the active species of the enzyme catalyzes directly the production of phenol and cyclohexenone. This enzymatic mechanism involves proton shuttles mediated by the porphyrin ring through the N-protonated intermediate, (2)5, which relays the proton either to the oxygen atom to form phenol ((2)7) or to the ortho-carbon atom to produce cyclohexenone product ((2)6). The formation of the phenol via this proton-shuttle mechanism will be competitive with the nonenzymatic conversion of benzene oxide to phenol by external acid catalysis. With the assumption that (2)5 is not fully thermalized, this novel mechanism would account also for the observation that there is a partial skeletal retention of the original hydrogen of the activated C-H bond, due to migration of the hydrogen from the site of hydroxylation to the adjacent carbon (so-called "NIH shift" (Jerina, D. M.; Daly, J. W. Science 1974, 185, 573-582)). Thus, in general, the computationally discovered mechanism of a porphyrin proton shuttle suggests thatthere is an enzymatic pathway that converts benzene directly to a phenol and ketone, in addition to nonenzymatic production of these species by conversion of arene oxide to phenol and ketone. The potential generality of protonated porphyrin intermediates in P450 chemistry is discussed in the light of the H/D exchange observed during some olefin epoxidation reactions (Groves, J. T.; Avaria-Neisser, G. E.; Fish, K. M.; Imachi, M.; Kuczkowski, R. J. Am. Chem. Soc. 1986, 108, 3837-3838) and the general observation of heme alkylation products (Kunze, K. L.; Mangold, B. L. K.; Wheeler, C.; Beilan, H. S.; Ortiz de Montellano, P. R. J. Biol. Chem. 1983, 258, 4202-4207). The competition, similarities, and differences between benzene oxidation viz. olefin epoxidation and alkanyl C-H hydroxylation are discussed, and comparison is made with relevant experimental and computational data. The dominance of low-spin reactivity in benzene hydroxylation viz. two-state reactivity (Shaik, S.; de Visser, S. P.; Ogliaro, F.; Schwarz, H.; Schröder, D. Curr. Opin. Chem. Biol. 2002, 6, 556-567) in olefin epoxidation and alkane hydroxylation is traced to the loss of benzene resonance energy during the bond activation step.