In this study, mechanistic insights into the hydrolysis of an extremely stable tertiary peptide bond (Ser-Pro) in the Ser-Pro-Phe sequence by an artificial enzyme, metal (Pd2+, Co2+, or Zn2+)-beta-cyclodextrin (CD) complex, have been provided. In particular, the exact reaction mechanism, the location of CD (number of -CH2 groups downstream from the metal center), conformation of CD (primary or secondary rim of CD facing the substrate), the number of CD (one or two), and the optimum metal ion (Pd2+, Co2+, or Zn2+) have been suggested using a state-of-the-art hybrid quantum mechanics/molecular mechanics (QM/MM: B3LYP/Amber) approach. The QM/MM calculations suggest that the internal delivery mechanism is the most energetically feasible for the peptide hydrolysis. The inclusion of a CD ring at two -CH2 groups downstream from the metal center can provide 3 x 10(5) times acceleration in the activity, while the replacement of Pd2+ with Co2+ enhances the rate activity another 3.7 x 10(4) times.