Ring hydroxylation and coupled rearrangement reactions catalyzed by 4-hydroxyphenylpyruvate dioxygenase were studied with the QM/MM method ONIOM(B3LYP:AMBER). For electrophilic attack of the ferryl species on the aromatic ring, five channels were considered: attacks on the three ring atoms closest to the oxo ligand (C1, C2, C6) and insertion of oxygen across two bonds formed by them (C1-C2, C1-C6). For the subsequent migration of the carboxymethyl substituent, two possible directions were tested (C1-C2, C1-C6), and two different mechanisms were sought (stepwise radical, single-step heterolytic). In addition, formation of an epoxide (side)product and benzylic hydroxylation, as catalyzed by the closely related hydroxymandelate synthase, were investigated. From the computed reaction free energy profiles it follows that the most likely mechanism of 4-hydroxyphenylpyruvate dioxygenase involves electrophilic attack on the C1 carbon of the ring and subsequent single-step heterolytic migration of the substituent. Computed values of the kinetic isotope effect for this step are inverse, consistent with available experimental data. Electronic structure arguments for the preferred mechanism of attack on the ring are also presented.