Molecular dynamics simulations employing combined quantum mechanical and molecular mechanical (QM/MM) potentials have been carried out to investigate the reaction mechanism of the hydrolysis of paraoxon by phosphotriesterase (PTE). We used a dual-level QM/MM approach that synthesizes accurate results from high-level electronic structure calculations with computational efficiency of semiempirical QM/MM potentials for free energy simulations. In particular, the intrinsic (gas-phase) energies of the active site in the QM region are determined by using density functional theory (B3LYP) and second-order Møller-Plesset perturbation theory (MP2) and the molecular dynamics free energy simulations are performed by using the mixed AM1:CHARMM potential. The simulation results suggest a revised mechanism for the phosphotriester hydrolysis mechanism by PTE. The reaction free energy profile is mirrored by structural motions of the binuclear metal center in the active site. The two zinc ions occupy a compact conformation with an average zinc-zinc distance of 3.5 ± 0.1 Å in the Michaelis complex, whereas it is elongated to 5.3 ± 0.3 Å at the transition state and product state. The substrate is loosely bound to the more exposed zinc ion (Zn β2+) at an average distance of 3.8 Å ± 0.3 Å. The P=O bond of the substrate paraoxon is activated by adopting a tight coordination to the Znβ2+, releasing the coordinate to the bridging hydroxide ion and increasing its nucleophilicity. It was also found that a water molecule enters into the binding pocket of the loosely bound binuclear center, originally occupied by the nucleophilic hydroxide ion. We suggest that the proton of this water molecule is taken up by His254 at low pH or released to the solvent at high pH, resulting in a hydroxide ion that pulls the Znβ2+ ion closer to form the compact configuration and restores the resting state of the enzyme.