The catalytic mechanism of 2-methy1-3-hydroxypyridine-5-carboxylic acid (MHPC) oxygenase (MHPCO) has been systematically studied using DFT and ONIOM(DFT: MM) methods. MHPCO catalyzes the hydroxylation and subsequent ring-opening of the aromatic substrate MHPC to give the aliphatic product alpha-(N-acetylaminomethylene)succinic acid (AAMS). Our calculations show that the active-site residues Arg211 and Tyr223 have a minor effect on the reaction, while the peptide bond of Pro295-Ala296, the side chain of Tyr82 and several crystal water molecules affect the reaction energy profile considerably. Both DFT and ONIOM calculations show that the ring-opening pathway B, in which an epoxy transition state is formed, is more favored than the direct C2-C3 cleavage pathway A. Different QM/MM partitioning schemes have been used to study the enzymatic reaction, and the results show that both the reaction barriers for the hydroxylation and the ring-opening pathways are sensitive to the QM/MM partitioning.