A detailed EPR and computational study of a key paramagnetic form of xanthine oxidase (XO) has been performed which serves as a basis for developing a valence bond description of C-H activation and transition state stabilization along the reaction coordinate with aldehyde substrates. EPR spectra of aldehyde Inhibited XO have been analyzed in order to provide information regarding the relationship between the g-, 95,97Mo hyperfine (AMo), and the 13C hyperfine (AC) tensors. The analysis of the EPR spectra have allowed for greater insight into the electronic origin of key delocalizations within the Mo-Oeq-C fragment, and how these contribute to C-H bond activation/cleavage and transition state (TS) stabilization. A natural bond orbital analysis of the enzyme reaction coordinate with aldehyde substrates shows that both Mo=S π→C-H σ* (ΔE= 24.3 kcal/mol) and C-H σ → Mo=S π* (ΔE = 20.0 kcal/mol) back donation are important in activating the substrate for C-H bond for cleavage. Additional contributions to C-H activation derive from Oeq lp→C-H σ* (lp = lone pair; ΔE = 8.2 kcal/mol), and S lp→C-H σ* (ΔE = 13.2 kcal/mol) stabilizing interactions. The Oeq donor ligand that derives from water is part of the Mo-Oeq-C fragment probed in the EPR spectra of XO Inhibited, and the observation of Oeq lp→C-H σ* back donation indicates a key role for the Oeq in activating the substrate C-H bond for cleavage. We also show that the Oeq donor plays an even more important role in transition state (TS) stabilization. We find that Oeq→(Mo + C) charge transfer dominantly contributes to stabilization of the TS (ΔE = 89.5 kcal/mol) and the Mo-Oeq-C delocalization pathway reduces strong electronic repulsions that contribute to the classical TS energy barrier. The Mo-Oeq-C delocalization at the TS allows for the TS to be described in valence bond terms as a resonance hybrid of the reactant (R) and product (P) valence bond wavefunctions.