Density functional theory and continuum dielectric methods have been employed to evaluate the free energy of successive aqua-substitution reactions: [Mg(H2O)(6-m-n)LmLn'](2+mz+ny) + L-z --> [Mg(H2O)(5-m-n)Lm+1Ln'](2+(m+1)z+ny) + H2O. The ligands L-z or L'(y) under consideration are simple organic molecules that model the amino acid residues that are most commonly found as protein ligands to divalent magnesium. In addition, the Protein Data Bank was surveyed for 3-dimensional protein structures of magnesium-binding sites containing only amino acid ligands. The results obtained were used to delineate the most thermodynamically preferable inner-sphere coordination environment for magnesium. The results also suggest an explanation for two phenomena: (i) the observed inner-sphere binding mode of Mg2+ to proteins and (ii) the unique role of Mg2+ as a carrier of water molecules that mediate enzymatic hydrolysis reactions.