Heme metabolism by heme oxygenase (HO) is investigated with quantum mechanical/molecular mechanical (QM/MM) calculations. A mechanism assisted by water is proposed: (1) an iron–oxo species and a water molecule are generated by the heterolytic cleavage of the O–O bond of an iron–hydroperoxo species in a similar way to P450-mediated reactions, (2) a hydrogen atom abstraction by the iron–oxo species from the generated water molecule and the C–O bond formation between the water molecule and the α-meso carbon take place simultaneously. The water molecule is hydrogen-bonded to the oxo ligand and to the water cluster in the active site of HO. The water cluster can control the position of the generated water molecule to ensure the regioselective oxidation of heme at the α-meso position, at the same time, can facilitate the oxidation by stabilizing a positive charge on the water molecule in the transition state. A key difference between HO and P450 is observed in the structure of the active site; Thr252 in P450 blocks the access of the water molecule to the α-meso position, and can thus suppress the undesired heme oxidation for P450.