Selective hydroxylation of sesquiterpenes remains a major challenge in synthetic chemistry due to their chemical homogeneity and steric complexity. Here, we report the Rieske oxygenase (RO)-catalyzed hydroxylation of sesquiterpenes using cumene dioxygenase (CDO) from Pseudomonas fluorescens IP01. Wild-type CDO catalyzed the monohydroxylation of the sesquiterpene β-bisabolene, producing ring-hydroxylated β-bisabolene-5-ol and tail-hydroxylated (S)-β-bisabolene-13-ol in a 64:21 ratio, with a total product formation of 0.43 ± 0.07 mM. A single-loop deletion variant, L284del, enhanced both total product formation and selectivity toward the ring-hydroxylated product, producing 1.40 ± 0.08 mM and enabling preparative-scale isolation (17 mg, 0.08 mmol, 39% yield). Another single-loop variant, I288del, similarly increased total product formation while shifting regioselectivity from ring- to tail-hydroxylation in a 5:81 ratio, generating 1.07 ± 0.04 mM tail-hydroxylated product and enabling its preparative-scale isolation (24 mg, 0.11 mmol, 55% yield). To understand this clear switch in regioselectivity, we conducted molecular dynamics (MD) and adaptive steered MD simulations. This revealed that I288del increased the substrate tunnel openness and frequency of access, promoting a tail-first orientation of the substrate. This preorientation enhanced the probability of reactive conformations in proximity to the catalytic iron. Binding energy calculations further supported a loss of orientation bias in I288del, giving further insight into the regioselectivity shift. Additional engineering yielded the variant N279T_I288del_A321T, which enhanced the formation of the tail-hydroxylated compound to 1.58 ± 0.26 mM. Further, variant I288del enabled the conversion of α-santalene, a reaction not catalyzed by the wild-type enzyme. Our study provides mechanistic insight into how tunnel dynamics and substrate preorientation govern selectivity in RO-catalyzed C–H functionalization.