The O-demethylation of lignin aromatics is a rate-limiting step in their bioconversion to higher-value compounds. A recently discovered cytochrome P450, SyoA, demethylates the S-lignin aromatic syringol. In this work, we solve high-resolution X-ray crystal structures of substrate-free and substrate-bound SyoA and evaluate demethylation of para-substituted S-lignin aromatics via monooxygenase and peroxide shunt pathways. We find that SyoA demethylates S-lignin aromatics exclusively using the peroxide shunt pathway. The atomic-resolution structures reveal the position of non-canonical residues in the I-helix (Gln252, Glu253). Mutagenesis of this amide-acid pair in SyoA shows they are critical for catalytic activity. This work expands the enzymatic toolkit for improving the capacity to funnel lignin derived aromatics towards higher value compounds and defines the chemistry within the active site of the enzyme that enables peroxygenase activity. These insights provide a framework for engineering peroxygenase activity in other heme enzymes to generate easier to use biocatalysts.