There are two types of cytochrome P450 enzymes in nature, namely, the monooxygenases and the peroxygenases. Both enzyme classes participate in substrate biodegradation or biosynthesis reactions in nature, but the P450 monooxygenases use dioxygen, while the peroxygenases take H2O2 in their catalytic cycle instead. By contrast to the P450 monooxygenases, the P450 peroxygenases do not require an external redox partner to deliver electrons during the catalytic cycle, and also no external proton source is needed. Therefore, they are fully self-sufficient, which affords them opportunities in biotechnological applications. One specific P450 peroxygenase, namely, P450 OleTJE, reacts with long-chain linear fatty acids through oxidative decarboxylation to form hydrocarbons and, as such, has been implicated as a suitable source for the biosynthesis of biofuels. Unfortunately, the reactions were shown to produce a considerable amount of side products originating from Ca and Cb hydroxylation and desaturation. These product distributions were found to be strongly dependent on whether the substrate had substituents on the Ca and/or Cb atoms. To understand the bifurcation pathways of substrate activation by P450 OleTJE leading to decarboxylation, Ca hydroxylation, Cb hydroxylation and Ca-Cb desaturation, we performed a computational study using 3-phenylpropionate and 2-phenylbutyrate as substrates. We set up large cluster models containing the heme, the substrate and the key features of the substrate binding pocket and calculated (using density functional theory) the pathways leading to the four possible products. This work predicts that the two substrates will react with different reaction rates due to accessibility differences of the substrates to the active oxidant, and, as a consequence, these two substrates will also generate different products. This work explains how the substrate binding pocket of P450 OleTJE guides a reaction to a chemoselectivity.