Understanding the formation mechanism of the [Cu2O](2+) active site in Cu-ZSM-5 is important for the design of efficient catalysts to selectively convert methane to methanol and related value-added chemicals and for N2O decomposition. Spectroscopically validated DFT calculations are used here to evaluate the thermodynamic and kinetic requirements for formation of [Cu2O](2+) active sites from the reaction between binuclear Cu-I sites and N2O in the 10-membered rings Cu-ZSM-5. Thermodynamically, the most stable Cu-I center prefers bidentate coordination with a close to linear bite angle. This binuclear Cu-I site reacts with N2O to generate the experimentally observed [Cu2O](2+) site. Kinetically, the reaction coordinate was evaluated for two representative binuclear Cu-I sites. When the Cu-Cu distance is sufficiently short (<4.2 angstrom), N2O can bind in a "bridged" mu-1,1-O fashion and the oxo-transfer reaction is calculated to proceed with a low activation energy barrier (2 kcal/mol). This is in good agreement with the experimental E-a for N2O activation (2.5 +/- 0.5 kcal/mol). However, when the Cu-Cu distance is long (>5.0 angstrom), N2O binds in a "terminal" eta(1)-O fashion to a single Cu-I site of the dimer and the resulting E-a for N2O activation is significantly higher (16 kcal/ mol). Therefore, bridging N2O between two Cu-I centers is necessary for its efficient two-electron activation in [Cu2O](2+) active site formation. In nature, this N2O reduction reaction is catalyzed by a tetranuclear Cu-z cluster that has a higher E-a. The lower E-a for Cu-ZSM-5 is attributed to the larger thermodynamic driving force resulting from formation of strong Cu-II-oxo bonds in the ZSM-5 framework.