The catalytic mechanism of the glycyl-radical-containing enzyme pyruvate-formate lyase (PFL) is investigated using high-level quantum chemical methods. PFL catalyzes the reversible conversion of pyruvate and coenzyme A (CoA) into formate and acetylated CoA. Large models are employed, based on a recent X-ray crystal structure of PFL in complex with the pyruvate substrate. The rate-limiting step is shown to be the homolytic C1-C2 bond cleavage of pyruvate, which occurs after the attack of the Cys418 radical on the carbonyl carbon of pyruvate. For the acetylation of CoA, we propose a new mechanism, in which the released formyl radical anion abstracts a hydrogen atom directly from CoA. This way, the acetyl group transfer from Cys418 becomes facile. The full potential energy curve for the PFL reactions is presented.