The possible mechanism by which the insulin-degrading enzyme (IDE) zinc-binding protease carries out its catalytic function toward two peptides of different length, simulating a portion of B chain of insulin, was investigated on an enzymatic model consisting of 130/159 atoms, using the density functional theory method and the hybrid exchange-correlation functional B3LYP in gas phase and in the protein environment. Based on the geometry and relative stabilities of minima and transition states on the potential energy profiles, we determined that proteolysis reaction is exothermic and proceeds quickly as the barrier in the rate-limiting step falls widely within the range of values expected for an enzymatic catalysis, both in vacuum and in protein medium