Taurine:α-ketoglutarate dioxygenase (TauD) is one of the most important enzymes in the α-ketoglutarate dioxygenase family, which are involved in many important biochemical processes. TauD converts taurine into amino acetaldehyde and sulfite at its nonheme iron center, and a large H/D kinetic isotope effect (KIE) has been found in the hydrogen atom transfer (HAT) of taurine suggesting a large tunneling effect. Recently, highly electrophilic Fe(III)-oxyl radicals have been proposed as a key species for HAT in the catalytic mechanism of C–H activation, which might be prepared prior to the actual HAT. In order to investigate this hypothesis and large tunneling effect, DFT potential energy surfaces along the intrinsic reaction path were generated. The predicted rate constants and H/D KIEs using variational transition-state theory including multidimensional tunneling, based on these potential surfaces, have excellent agreement with experimental data. This study revealed that the reactive processes of C–H activation consisted of two distinguishable parts: (1) the substrate approaching the Fe(IV)-oxo center without C–H bond cleavage, which triggers the catalytic process by inducing metal-to-ligand charge transfer to form the Fe(III)-oxyl species, and (2) the actual HAT from the substrate to the Fe(III)-oxyl species. Most of the activation energy was used in the first part, and the actual HAT required only a small amount of energy to overcome the TS with a very large tunneling effect. The donor–acceptor interaction between σC–H and σ*Fe–O orbitals reduced the activation energy significantly to make C–H activation feasible.