Membrane-bound styrene oxide isomerase (SOI) catalyses the Meinwald rearrangement—a Lewis-acid-catalysed isomerization of an epoxide to a carbonyl compound—and has been used in single and cascade reactions. However, the structural information that explains its reaction mechanism has remained elusive. Here we determine cryo-electron microscopy (cryo-EM) structures of SOI bound to a single-domain antibody with and without the competitive inhibitor benzylamine, and elucidate the catalytic mechanism using electron paramagnetic resonance spectroscopy, functional assays, biophysical methods and docking experiments. We find ferric haem b bound at the subunit interface of the trimeric enzyme through H58, where Fe(III) acts as the Lewis acid by binding to the epoxide oxygen. Y103 and N64 and a hydrophobic pocket binding the oxygen of the epoxide and the aryl group, respectively, position substrates in a manner that explains the high regio-selectivity and stereo-specificity of SOI. Our findings can support extending the range of epoxide substrates and be used to potentially repurpose SOI for the catalysis of new-to-nature Fe-based chemical reactions. (Figure presented.).