The viomycin biosynthesis enzyme VioC is a non-heme iron and α-ketoglutarate-dependent dioxygenase involved in the selective hydroxylation of L-arginine at the C3-position for antibiotics biosynthesis. Interestingly, experimental studies showed that using the substrate analogue, namely L-homo-arginine, a mixture of products was obtained originating from C3-hydroxylation, C4-hydroxylation and C3‒C4 desaturation. To understand how the addition of one CH2 group to a substrate can lead to such a dramatic change in selectivity and activity, we decided to do a computational study using QM cluster models. We set up a large active-site cluster model of 245 atoms that includes the oxidant with its first- and second-coordination sphere influence as well as the substrate-binding pocket. The model was validated against experimental work on related enzymes and previous computational studies. Thereafter, possible pathways leading to products and byproducts were investigated for a model containing L-Arg and one for L-homo-Arg as substrate. The calcu-lated free energies of activation predict product distributions that match experimental observation and give a low-energy C3-hydroxylation pathway for L-Arg, while for L-homo-Arg several barriers are found to be close in energy leading to a mixture of products. We then analyzed the origins of the differences in product distributions using thermochemical, va-lence bond and electrostatic models. Our studies show that the C3-H and C4-H bond strengths of L-Arg and L-homo-Arg are similar; however, external perturbations from an induced electric field of the protein affect the relative C-H bond strengths of L-Arg dramatically and make the C3-H bond the weakest and guide the reaction to a selective C3-hydroxylation channel. Therefore, the charge distribution in the protein and the induced electric dipole field of the active site of VioC guides the L-Arg substrate activation to C3-hydroxylation and disfavors the C4-hydroxylation pathway, while this does not happen for L-homo-Arg. Tight substrate positioning and electrostatic perturbations from the second-coordination sphere residues in VioC also result in a slower overall reaction for L-Arg; however, they enable a high sub-strate selectivity. Our studies highlight the importance of the second-coordination sphere in proteins that position the substrate and oxidant, perturb charge distributions and enable substrate selectivity.