A hybrid quantum mechanical/molecular mechanical approach is used to elucidate structural and energetic features of amide hydrolysis by the enzyme papain. The role of the enzyme in stabilizing the thiolate-imidazolium ion pair is examined and the potential energy pathway for the subsequent attack of the cysteine anion and proton transfer from the imidazolium cation is determined. The reaction is found to be concerted rather than stepwise, and the transition state for the reaction is located. The effect of residue mutations both on the ion pair stability and on the barrier to amide hydrolysis is explored and found to be in agreement with experiment. In this work both high-level electronic structure and semiempirical MO methods are used, with location and characterization of stationary structures. Rearrangement of the enzyme in response to the changing electronic structure of the active site is also considered.