The mechanism of bacterial methanol dehydrogenase involves hydride equivalent transfer from substrate to the ortho-quinone PQQ to provide a C5-reduced intermediate that subsequently rearranges to the hydroquinone PQQH(2). We have studied the PQQ reduction by molecular dynamic (MD) simulations in aqueous solution. Among the five simulated structures, either Asp297 or Glu171 or both are ionized. Reasonable structures are obtained only when both carboxyl groups are ionized. This is not unexpected since the kinetic pH optimum is 9.0. In the structure of the enzyme.PQQ.HOCH3 complex, the hydrogen bonded Glu171-CO2-...H-OCH3 is in a position to act as a general base catalyst for hydride equivalent transfertoC5of PQQ. We thus suggest that Glu171 plays the role of general base catalyst in PQQ reduction rather than Asp297 as previously suggested. The reduction is assisted by Arg324, which hydrogen bonds to the ortho-quinone moiety of PQQ. The rearrangement of the C5-reduced intermediate to provide hydroquinone PQQH2 is also assisted by proton abstraction by Glu171-CO2- and the continuous hydrogen bonding of Arg324 throughout the entire reaction. These features as well as the mapping of the channel for substrate and water into the active site entrance are the observations of major importance.