Oxygenase-catalysed post-translational modifications of basic protein residues, including lysyl hydroxylations and N^ε-methyl lysyl demethylations, have important cellular roles. Jumonji-C (JmjC) domain-containing protein 5 (JMJD5), which genetic studies reveal is essential in animal development, is reported as a histone N^ε-methyl lysine demethylase (KDM). Here we report how extensive screening with peptides based on JMJD5 interacting proteins led to the finding that JMJD5 catalyses stereoselective C-3 hydroxylation of arginine residues in sequences from human regulator of chromosome condensation domain-containing protein 1 (RCCD1) and ribosomal protein S6 (RPS6). High-resolution crystallographic analyses reveal overall fold, active site and substrate binding/product release features supporting the assignment of JMJD5 as an arginine hydroxylase rather than a KDM. The results will be useful in the development of selective oxygenase inhibitors for the treatment of cancer and genetic diseases.