Clavaminic acid synthase from Streptomyces clavuligerus is an FeII/2‐oxoglutarate‐dependent dioxygenase, crucial for the biosynthesis of the β‐lactamase inhibitor clavulanic acid. It catalyses three consecutive oxidative reactions, that is, hydroxylation, cyclisation and desaturation, in a single binding cavity. As follows from the results of this QM/MM study, CAS versatility and selectivity depends on the binding cavity, which interplays differently with the substrate for each reaction. The enzyme–substrate interactions affect the substrate's ability to re‐position during the reaction, either constraining it in its primary position, which impedes processes other than oxygen rebound, or allowing change, which facilitates desaturation. This differential effect originates from two aspartate residues, which strongly interact with the guanidine group of the hydroxylation substrate and stabilise the orientation of the molecule. These residues interact less effectively with the smaller amine group of the desaturation substrate(s), aiding their re‐positioning and the subsequent formation of a double bond.