Nitric-oxide synthases (NOS) are heme-thiolate enzymes that N-hydroxylate L-arginine (L-Arg) to make NO. NOS contain a unique Trp residue whose side chain stacks with the heme and hydrogen bonds with the heme thiolate. To understand its importance we substituted His for Trp188 in the inducible NOS oxygenase domain (iNOSoxy) and characterized enzyme spectral, thermodynamic, structural, kinetic, and catalytic properties. The W188H mutation had relatively small effects on l-Arg binding and on enzyme heme-CO and heme-NO absorbance spectra, but increased the heme midpoint potential by 88 mV relative to wild-type iNOSoxy, indicating it decreased heme-thiolate electronegativity. The protein crystal structure showed that the His188 imidazole still stacked with the heme and was positioned to hydrogen bond with the heme thiolate. Analysis of a single turnover L-Arg hydroxylation reaction revealed that a new heme species formed during the reaction. Its build up coincided kinetically with the disappearance of the enzyme heme-dioxy species and with the formation of a tetrahydrobiopterin (H4B) radical in the enzyme, whereas its subsequent disappearance coincided with the rate of l-Arg hydroxylation and formation of ferric enzyme. We conclude: (i) W188H iNOSoxy stabilizes a heme-oxy species that forms upon reduction of the heme-dioxy species by H4B. (ii) The W188H mutation hinders either the processing or reactivity of the heme-oxy species and makes these steps become rate-limiting for l-Arg hydroxylation. Thus, the conserved Trp residue in NOS may facilitate formation and/or reactivity of the ultimate hydroxylating species by tuning heme-thiolate electronegativity.