Epoxidation (C=C) vis-à-vis allylic hydroxylation (C-H) reactions of propene with a model compound I (Cpd I) of the enzyme cytochrome P450 were studied using B3LYP density functional theory. Potential energy profiles and kinetic isotope effects (KIE) were calculated. The interactions in the protein pocket were mimicked by adding two external NH- - -S hydrogen bonds to the thiolate ligand and by introducing a nonpolar medium (with a dielectric constant, epsilon = 5.7) that can exert a polarization effect on the reacting species. A two-state reactivity (TSR) with high-spin (HS) and low-spin (LS) states were located for both processes (Ogliaro, F.; Harris, N.; Cohen, S.; Filatov, M.; de Visser, S. P.; Shaik, S. J. Am. Chem. Soc. 2000, 122, 8977-8989. de Visser, S. P.; Ogilaro, F.; Harris, N.; Shaik, S. J. Am. Chem. Soc. 2001, 123, 3037-3047). The HS processes were found to be stepwise, whereas the LS processes were characterized as nonsynchronous but effectively concerted pathways. The computed KIE for C-H hydroxylation with and without tunneling corrections are large (>7), and they support the assignment of the corresponding transition states as hydrogen-abstraction species (Groves, J. T.; Han, Y.-Z. In Cytochrome P450: Structures, Mechanism and Biochemistry, 2nd ed.; Ortiz de Montellano, P. R., Ed.; Plenum Press: New York, 1995; Chapter 1; pp 3-48). In the gas phase, epoxidation is energetically favorable by 3.4 kcal mol(-1). Inclusion of zero-point energy reduces this difference but still predicts C=C/C-H > 1. Environmental effects were found to have major impact on the C=C/C-H ratio as well as on the stereoselectivity of the processes. Thus, two NH- - -S hydrogen bonds away from the reaction center reverse the regioselectivity and prefer hydroxylation, namely, C=C/C-H <1. The polarity of the medium further accentuates the trend and leads to a change by 2 orders of magnitude in the regioselectivity, C=C/C-H << 1. Furthermore, since the environmental interactions prefer the LS over the HS reactions, both hydroxylation and epoxidation processes are rendered more stereoselective, again by 2 orders of magnitude. It follows, therefore, that Cpd I is a chameleon oxidant (Ogliaro, F.; Cohen, S.; de Visser, S. P.; Shaik, S. J. Am. Chem. Soc. 2000, 122, 12892-12893; Ogliaro, F.; de Visser, S. P.; Cohen, S.; Kaneti, J.; Shaik, S. Chembiochem. 2001, 2, 848-851; Ogliaro, F.; de Visser, S. P.; Groves, J. T.; Shaik, S. Angew. Chem., Int. Ed. 2001, 40, 2874-2878) that tunes its reactivity and selectivity patterns in response to the protein environment in which it is accommodated. A valence bond (VB) model, akin to "redox mesomerism" (Bernadou, J.; Fabiano, A.-S.; Robert, A.; Meunier, B. J. Am. Chem. Soc. 1994, 116, 9375-9376), is constructed and enables the description of a chameleon transition state. It shows that the good donor ability of the thiolate ligand and the acceptor ability of the iron porphyrin create mixed-valent situations that endow the transition state with a great sensitivity to external perturbations as in the protein pocket. The model is used to discuss the computed results and to relate them to experimental findings.