Nuclease P1 is a trinuclear zinc enzyme that catalyzes the hydrolysis of single-stranded DNA and RNA. Density functional calculations are used to elucidate the reaction mechanism of this enzyme with a model of the active site designed on the basis of the X-ray crystal structure. 2-Tetrahydrofuranyl phosphate and methyl 2-tetrahydrofuranyl phosphate substrates are used to explore the phosphomonoesterase and phosphodiesterase activities of this enzyme, respectively. The calculations reveal that for both activities, a bridging hydroxide performs an in-line attack on the phosphorus center, resulting in inversion of the configuration. Simultaneously, the P-O bond is cleaved, and Zn2 stabilizes the negative charge of the leaving alkoxide anion and assists its departure. All three zinc ions, together with Arg48, provide electrostatic stabilization to the penta-coordinated transition state, thereby lowering the reaction barrier.