In plants, oxylipins regulate developmental processes and defense responses. The first specific step in the biosynthesis of the cyclopentanone class of oxylipins is catalyzed by allene oxide cyclase (AOC) that forms cis(+)-12-oxo-phytodienoic acid. The moss Physcomitrella patens has two AOCs (PpAOC1 and PpAOC2) with different substrate specificities for C18- and C20-derived substrates, respectively. To better understand AOC’s catalytic mechanism and to elucidate the structural properties that explain the differences in substrate specificity, we solved and analyzed the crystal structures of 36 monomers of both apo and ligand complexes of PpAOC1 and PpAOC2. From these data, we propose the following intermediates in AOC catalysis: (1) a resting state of the apo enzyme with a closed conformation, (2) a first shallow binding mode, followed by (3) a tight binding of the substrate accompanied by conformational changes in the binding pocket, and (4) initiation of the catalytic cycle by opening of the epoxide ring. As expected, the substrate dihydro analog cis-12,13S-epoxy-9Z,15Z-octadecadienoic acid did not cyclize in the presence of PpAOC1; however, when bound to the enzyme, it underwent isomerization into the corresponding trans-epoxide. By comparing complex structures of the C18 substrate analog with in silico modeling of the C20 substrate analog bound to the enzyme allowed us to identify three major molecular determinants responsible for the different substrate specificities (i.e. larger active site diameter, an elongated cavity of PpAOC2, and two nonidentical residues at the entrance of the active site).