In catalysis by metalloenzymes and in electrocatalysis by clusters related in structure and composition to the active components of such enzymes transition-metal atoms can play a central role in the catalyzed redox reactions. Changes to their oxidation states (OSs) are critical for understanding the reactions. The OS is a local property and we introduce a new, generally useful local method for determining OSs, their changes, and the associated bonding changes and electron flow. The method is based on computing optimally localized orbitals (OLOs). With this method, we analyze two cases, superoxide reductase (SOR) and a proposed hydrogen-producing model electrocatalyst [FeS 2]/[FeFe] P, a modification of the active site of the diiron hydrogenase enzymes. Both utilize an under-coordinated Fe site where a one-electron reduction (for SOR) or a two-electron reduction (for [FeFe] P) of the substrate occurs. We obtain the oxidation states of the Fe atoms and of their critical ligands, the changes of the bonds to those ligands, and the electron flow during the catalytic cycle, thereby demonstrating that OLOs constitute a powerful interpretive tool for unraveling reaction mechanisms by first-principles computations. © 2011 WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim.