The chemical pathways leading to the hydroxylated aromatic amino acids in phenylalanine and tryptophan hydroxylases have been investigated by means of hybrid density functional theory. In the catalytic core of these non-heme iron enzymes, dioxygen reacts with the pterin cofactor and is likely to be activated by forming an iron(IV)=O complex. The capability of this species to act as a hydroxylating intermediate has been explored. Depending on the protonation state of the ligands of the metal, two different mechanisms are found to be energetically possible for the hydroxylation of phenylalanine and tryptophan by the high-valent iron-oxo species. With a hydroxo ligand the two-electron oxidation of the aromatic ring passes through a radical, while an arenium cation is involved when a water replaces the hydroxide. After the attack of the activated oxygen on the substrate, it is also found that a 1,2-hydride shift (known as an NIH shift) generates a keto intermediate, which can decay to the true product through an intermolecular keto-enol tautomerization. The benzylic hydroxylation of 4-methylphenylalanine by the Fe(IV)=O species has also been investigated according to the rebound mechanism. The computed energetics lead to the conclusion that Fe(IV)=O is capable not only of aromatic hydroxylation, but also of benzylic hydroxylation.