In this paper we present computational studies directed at elucidating the mechanism of the oxidation of benzyl alcohol by liver alcohol dehydrogenase (LADH). This enzyme reaction involves a hydride transfer from the alcohol substrate to the nicotinamide adenine dinucleotide coenzyme and a proton relay that deprotonates the alcohol substrate. Electronic structure calculations at various levels of theory were performed on a 148-atom model of the active site, and classical molecular dynamics simulations were performed on the entire solvated LADH dimer. These calculations support the hypothesis that alcohol deprotonation occurs prior to the hydride transfer step and that the alcohol deprotonation facilitates the hydride transfer by lowering the barrier for hydride transfer. In this postulated mechanism, the alcohol deprotonation leads to a zinc-bound alkoxide ion, and the subsequent hydride transfer leads to the benzaldehyde product. The calculations indicate that the zinc-bound alkoxide forms a strong hydrogen bond to Ser48 and that hydride transfer is accompanied by a weakening of this hydrogen bond. The results also suggest that the barrier to hydride transfer is lowered by the electrostatic interaction between the substrate alkoxide oxygen and the zinc counterion in the active site. The interaction of the alkoxide oxygen lone pair orbitals with the zinc competes with the formation of the double bond required for the aldehyde product, resulting in an earlier, more alcohol-like transition state and thus a lower activation energy barrier. In addition, the interaction between the alkoxide oxygen and the zinc restricts the dynamical motion of the substrate, decreasing the average donor-acceptor distance for hydride transfer and hence lowering the activation energy barrier.