To investigate whether water relay plays an important role in phosphoryl transfer reactions, we have used several theoretical approaches to compare key properties of uridine 3'-m-nitrobenzyl phosphate (UNP) in aqueous and tert-butanol solutions. Previous kinetic experiments found that the isomerization reaction of UNP is abolished in tert-butanol, which was interpreted as the direct evidence that supports the role of water relay in phosphoryl transfer. We have analyzed solute flexibility and solvent structure near the solute using equilibrium molecular dynamics simulations and a combined quantum mechanical/molecular mechanism (QM/MM) potential function for the solute. Snapshots from the simulations are then used in minimum energy path calculations to compare the energetics of direct nucleophilic attack and water-mediated nucleophilic attack pathways. QM/MM simulations are also used to compare the pseudorotation barriers for the pentavalent intermediate formed following the nucleophilic attack, another key step for the isomerization reaction. Combined results from these calculations suggest that water relay does not offer any significant energetic advantage over the direct nucleophilic attack. Unfortunately, the lack of isomerization in tert-butanol solution cannot be straightforwardly explained based on the results we have obtained here and therefore requires additional analysis. This study, nevertheless, has provided new insights into several most commonly discussed possibilities.