The reactive collision of chloride anions and methyl iodide molecules forming iodide anions and methyl chloride is a typical example of a concerted bimolecular nucleophilic substitution (S(N)2) reaction. We present wave packet dynamics calculations to investigate quantum effects in the collinear gas phase reaction. A new type of reduced coordinate system is introduced to allow for an efficient solution of the time-dependent Schrodinger equation on an ab initio potential energy surface. The reduced coordinates were designed to study the direct rebound mechanism under the Walden inversion. Especially the suppressed direct rebound mechanism at low collision energies, the quantum effects of the initial state preparation and the influence of the CH3 inversion mode are addressed. The internal energy distributions of the molecular product are evaluated from the wave packet calculations and compared to experimental results obtained with crossed-beam velocity map ion imaging. The observed reactivity is discussed in light of a dynamical barrier, a concept that is illustrated by the wave packet dynamics.