Experimental studies by Shul'pin and co-workers have shown that vanadate anions in combination with pyrazine-2-carboxylic acid (PCA equivalent to pcaH) produce an exceptionally active complex that promotes the oxidation of alkanes and other organic molecules. Reaction of this complex with H2O2 releases HOOcenter dot free radicals and generates V(IV) species, which are capable of generating HOcenter dot radicals by reaction with additional H2O2. The oxidation of alkanes is initiated by reaction with the HOcenter dot radicals. The mechanism of hydrocarbon oxidation with vanadate/PCA/H2O2 catalyst has been studied using density functional theory. The proposed model reproduces the major experimental observations. It is found that a vanadium complex with one pca (PCA equivalent to pcaH) and one H2O2 ligand is the precursor to the species responsible for HOOcenter dot generation. It is also found that species containing two pea ligands and an H2O2 Molecule do not exist in the solution, in contradiction to previous interpretations of experimental observations. Calculated dependences of the oxidation rate on initial concentrations of PCA and H2O2,, have characteristic maxima, the shapes of which are determined by the equilibrium concentration of the active species. Conversion of the precursors requires hydrogen transfer from H2O2 to a vanadyl group. Our calculations show that direct transfer has a higher barrier than pca-assisted indirect transfer. Indirect transfer occurs by migration of hydrogen from coordinated H2O2 to the oxygen of a pca ligand connected to the vanadium atom. The proposed mechanism demonstrates the important role of the cocatalyst in the reaction and explains why H2O2 complexes without pca are less active. Our work shows that the generation of HOOcenter dot radicals cannot occur via cleavage of a V-OOH bond in the complex formed directly from the precursors, as proposed before. The activation barrier for this process is too high. Instead, HOOcenter dot radicals are formed via a sequence of additional steps involving lower activation barriers. The new mechanism for free radical generation underestimates the observed rate of hexane oxidation by less than an order of magnitude; however, the calculated activation energy (67-81 kJ/mol) agrees well with that determined experimentally (63-80 kJ/mol).