2-Oxoglutarate (2OG) dependent dioxygenases are ubiquitous iron containing enzymes that couple substrate oxidation to the conversion of 2OG to succinate and carbon dioxide. They participate in a wide range of biological processes including collagen biosynthesis, fatty acid metabolism, hypoxic sensing and demethylation of nucleic acids and histones. Although substantial progress has been made in elucidating their function, the role of many 2OG dioxygenases remains enigmatic. Here we have studied the 2OG and iron (Fe(II)) dependent dioxygenase Ofd2 in Schizosaccharomyces pombe, a member of the AlkB subfamily of dioxygenases. We show that decarboxylation of 2OG by recombinant Ofd2 is dependent on Fe(II) and a histidine residue predicted to be involved in Fe(II) coordination. The decarboxylase activity of Ofd2 is stimulated by histones, and H2A has the strongest effect. Ofd2 interacts with all four core histones, however, only very weakly with H4. Our results define a new subclass of AlkB proteins interacting with histones, which also might comprise some of the human AlkB homologs with unknown function.