To unravel the mechanism of chloroperoxidase (CPO)-catalyzed regioselective oxidation of indole, we studied the structure of the CPO-indole complex using nuclear magnetic resonance (NMR) relaxation measurements and computational techniques. The dissociation constant (KD) of the CPO-indole complex was calculated to be approximately 21 mM. The distances (r) between protons of indole and the heme iron calculated via NMR relaxation measurements and molecular docking revealed that the pyrrole ring of indole is oriented toward the heme with its 2-H pointing directly at the heme iron. Both KD and r values are independent of pH in the range of 3.0-6.5. The stability and structure of the CPO-indole complex are also independent of the concentration of chloride or iodide ion. Molecular docking suggests the formation of a hydrogen bond between the NH group of indole and the carboxyl O of Glu 183 in the binding of indole to CPO. Simulated annealing of the CPO-indole complex using r values from NMR experiments as distance restraints reveals that the van der Waals interactions were much stronger than the Coulomb interactions in the binding of indole to CPO, indicating that the association of indole with CPO is primarily governed by hydrophobic rather than electrostatic interactions. This work provides the first experimental and theoretical evidence of the long-sought mechanism that leads to the "unexpected" regioselectivity of the CPO-catalyzed oxidation of indole. The structure of the CPO-indole complex will serve as a lighthouse in guiding the design of CPO mutants with tailor-made activities for biotechnological applications.