The first key step in the oxidation of water to O-2 by the oxidized species [(bpy)(2)(O)(RuORuV)-O-V(O)(bpy)(2)](4+) of the Ru blue dimer is studied using density functional theory (DFT) and an explicit solvent treatment. In the model reaction system [L-2(O)(RuORuV)-O-V(O)L-2](4+)center dot(H2O)(4)center dot W-76, the surrounding water solvent molecules W are described classically while the inner core reaction system is described quantum mechanically using smaller model ligands (L). The reaction path found for the O-O single bond formation involves a proton relay chain: direct particiation of two water molecules in two proton transfers to yield the product [L-2(HOO)(RuORuIV)-O-IV(OH)L-2](4+)center dot(H2O)(3)center dot W-76. The calculated similar to 3 kcal/mol reaction free energy and similar to 15 kcal/mol activation free energy barrier at 298 K are consistent with experiment. Structural changes and charge flow along the intrinsic reaction coordinate, the solvent's role in the reaction barrier, and their significance for water oxidation catalysis are examined in detail.