Background: Isopenicillin N synthase (IPNS) catalyses formation of bicyclic isopenicillin N, precursor to all penicillin and cephalosporin antibiotics, from the linear tripeptide delta-((L)-alpha-aminoadipoyl)-(L)-cysteinyl-(D)-valine. IPNS is a non-haem iron(II)-dependent enzyme which utilises the full oxidising potential of molecular oxygen in catalysing the bicyclisation reaction. The reaction mechanism is believed to involve initial formation of the beta-lactam ring (via a thioaldehyde intermediate) to give an iron(IV)-oxo species, which then mediates closure of the 5-membered thiazolidine ring. Results: Here we report experiments employing time-resolved crystallography to observe turnover of an isosteric substrate analogue designed to intercept the catalytic pathway at an early stage. Reaction in the crystalline enzyme-substrate complex was initiated by the application of high-pressure oxygen, and subsequent flash freezing allowed an oxygenated product to be trapped, bound at the iron centre. A mechanism for formation of the observed thiocarboxylate product is proposed. Conclusions: In the absence of its natural reaction partner (the N-H proton of the L-cysteinyl-D-valine amide bond), the proposed hydroperoxide intermediate appears to attack the putative thioaldehyde species directly. These results shed light on the events preceding P-lactam closure in the IPNS reaction cycle, and enhance our understanding of the mechanism for reaction of the enzyme with its natural substrate.