Predicting metabolism of chemicals and potential toxicities of relevant metabolites remains a vital and difficult task in risk assessment. Recent findings suggested that polybrominated diphenyl ethers (PBDEs) can be transformed into dihydroxylated and dioxin metabolites catalyzed by cytochrome P450 enzymes (CYPs), whereas the mechanisms pertinent to these transformations remain largely unknown. Here, by means of density functional theory (DFT) calculations, we probed the metabolic pathways of 2,2′,4,4′-tetraBDE (BDE-47) using the active center model of CYPs (Compound I). Results show that BDE-47 is first oxidized to monohydroxylated products (HO-BDEs), wherein a keto–enol tautomerism is identified for rearrangement of the cyclohexenone intermediate. Dihydroxylation with HO-BDEs as precursors, has a unique phenolic H-abstraction and hydroxyl rebound pathway that is distinct from that for monohydroxylation, which accounts for the absence of epoxides in in vitro studies. Furthermore, we found only dihydroxylated PBDEs with heterophenyl −OH substituents ortho- and meta- to the ether bond serve as precursors for dioxins, which are evolved from aryl biradical coupling of diketone intermediates that are produced from dehydrogenation of the dihydroxylated PBDEs by Compound I. This study may enlighten the development of computational models that afford mechanism-based prediction of the xenobiotic biotransformation catalyzed by CYPs.