The first-shell mechanism of nitrile hydratase (NHase) is investigated theoretically using density functional theory. NHases catalyze the conversion of nitriles to amides and are classified into two groups, the non-heme Fe(III) NHases and the non-corrinoid Co(III) NHases. The active site of the non-heme iron NHase comprises a low-spin iron (S = (1)/(2)) with a remarkable set of ligands, including two deprotonated backbone nitrogens and both cysteine-sulfenic and cysteine-sulfinic acids. A widely proposed reaction mechanism of NHase is the first-shell mechanism in which the nitrile substrate binds directly to the low-spin iron in the sixth coordination site. We have used quantum chemical models of the NHase active site to investigate this mechanism. We present potential energy profiles for the reaction and provide characterization of the intermediates and transition-state structures for the NHase-mediated conversion of acetonitrile. The results indicate that the first-shell ligand Cys114-SO- could be a possible base in the nitrile hydration mechanism, abstracting a proton from the nucleophilic water molecule. The generally suggested role of the Fe(III) center as a Lewis acid, activating the substrate toward nucleophilic attack, is shown to be unlikely. Instead, the metal is suggested to provide electrostatic stabilization to the anionic imidate intermediate, thereby lowering the reaction barrier.