Catalase-peroxidases (KatGs) belong to the peroxidase-catalase superfamily and are found in bacteria, archaea, and lower eukaryotes including fungi. Despite having sequence and structural homology with monofunctional peroxidases, KatGs are the only bifunctional peroxidases with a dominating hydrogen peroxide dismutating activity which rivals that of typical catalases. Albeit both heme-containing catalases and KatGs catalyse the same reaction (2H2O2→2H2O+O2), the mechanism is clearly different. In KatG the activity is based on two redox cofactors, the iron-containing heme b and in close proximity the unique posttranslationally and endogenously generated Trp-Tyr-Met adduct. This strictly conserved adduct is essential for the pseudocatalytic activity of KatGs without influencing the peroxidase activity. The key element in the proposed reaction mechanism is the formation of an adduct radical during turnover. This review accounts for the available literature for this mechanism and additionally discusses the role of the peroxidase activity with a focus on the activation of the antitubercular pro-drug isoniazid by KatG.