Peptidylglycine monooxygenase is a copper-dependent enzyme that catalyzes C-alpha hydroxylation of glycine extended pro-peptides, a critical post-translational step in peptide hormone processing. The canonical mechanism posits that dioxygen binds at the mononuclear M-center to generate a Cu(II)-superoxo species capable of H atom abstraction from the peptidyl substrate, followed by long-range electron tunneling from the CuH center. Recent crystallographic and biochemical data have challenged this mechanism, suggesting instead that an "open-to-closed" transition brings the copper centers closer, allowing reactivity within a binuclear intermediate. Here we present the first direct observation of an enzyme-bound binuclear copper species, captured by the use of an Ala-Ala-Phe-hCys inhibitor complex. This molecule reacts with the fully reduced enzyme to form a thiolate-bridged binuclear species characterized by EXAFS of the WT and its M314H variant and with the oxidized enzyme to form a novel mixed valence entity characterized by UV/vis and EPR. Mechanistic implications are discussed.