Allene oxides are reactive epoxides biosynthesized from fatty acid hydroperoxides by specialized cytochrome P450s or by catalase-related hemoproteins. Here we cloned, expressed, and characterized a gene encoding a lipoxygenase-catalase/peroxidase fusion protein from Acaryochloris marina. We identified novel allene oxide synthase (AOS) activity and a by-product that provides evidence of the reaction mechanism. The fatty acids 18.4omega3 and 18.3omega3 are oxygenated to the 12R-hydroperoxide by the lipoxygenase domain and converted to the corresponding 12R,13-epoxy allene oxide by the catalase-related domain. Linoleic acid is oxygenated to its 9R-hydroperoxide and then, surprisingly, converted approximately 70% to an epoxyalcohol identified spectroscopically and by chemical synthesis as 9R,10S-epoxy-13S-hydroxyoctadeca-11E-enoic acid and only approximately 30% to the 9R,10-epoxy allene oxide. Experiments using oxygen-18-labeled 9R-hydroperoxide substrate and enzyme incubations conducted in H2(18)O indicated that approximately 72% of the oxygen in the epoxyalcohol 13S-hydroxyl arises from water, a finding that points to an ionic intermediate (epoxy allylic carbocation) during catalysis. AOS and epoxyalcohol synthase activities are mechanistically related, with a reacting intermediate undergoing a net hydrogen abstraction or hydroxylation, respectively. The existence of epoxy allylic carbocations in fatty acid transformations is widely implicated although for AOS reactions, without direct experimental support. Our findings place together in strong association the reactions of allene oxide synthesis and an ionic reaction intermediate in the AOS-catalyzed transformation.