Density functional theory calculations have been used to investigate the reaction mechanisms of phosphodiester hydrolysis and transesterification catalyzed by a dinuclear zinc complex of the 2-(N-isopropyl-N-((2-pyridyl)methyl)-aminomethyl)-6-(N-(carboxylmethyl)-N-((2-pyridyl)methyl)amino-methyl)-4-methylphenol (IPCPMP) ligand, mimicking the active site of zinc phosphotriesterase. The substrates bis(2,4)-dinitrophenyl phosphate (BDNPP) and 2-hydroxypropyl-p-nitrophenyl phosphate (HPNP) were employed as analogues of DNA and RNA, respectively. A number of different mechanistic proposals were considered, with the active catalyst harboring either one or two hydroxide ions. It is concluded that for both reactions the catalyst has only one hydroxide bound, as this option yields lower overall energy barriers. For BDNPP hydrolysis, it is suggested that the hydroxide acts as the nucleophile in the reaction, attacking the phosphorus center of the substrate. For HPNP transesterification, on the other hand, the hydroxide is proposed to act as a Bronsted base, deprotonating the alcohol moiety of the substrate, which in turn performs the nucleophilic attack. The calculated overall barriers are in good agreement with measured rates. Both reactions are found to proceed by essentially concerted associative mechanisms, and it is demonstrated that two consecutive catalytic cycles need to be considered in order to determine the rate-determining free energy barrier.