Porphobilinogen synthase (PBGS) is a key enzyme in heme biosynthesis that catalyzes the formation of porphobilinogen (PBG) from two 5-aminolevulinic acid (5-ALA) molecules via formation of intersubstrate C-N and C-C bonds. The active site consists of several invariant residues, including two lysyl residues (Lys210 and Lys263; yeast numbering) that bind the two substrate moieties as Schiff bases. Based on experimental studies, various reaction mechanisms have been proposed for this enzyme that generally can be classified according to whether the intersubstrate C-C or C-N bond is formed first. However, the detailed catalytic mechanism of PBGS remains unclear. In the present study, we have employed density functional theory methods in combination with chemical models of the two key lysyl residues and two substrate moieties in order to investigate various proposed reaction steps and gain insight into the mechanism of PBGS. Importantly, it is found that mechanisms in which the intersubstrate C-N bond is formed first have a rate-limiting barrier (17.5 kcal/mol) that is lower than those in which the intersubstrate C-C bond is formed first (22.8 kcal/mol).