A hybrid quantum mechanical-molecular mechanical (QM-MM) potential energy function with ab initio and density functional capabilities has been implemented in the CHARMM program. It makes use of the quantum mechanical program CADPAC and the CHARMM molecular mechanics energy function; a GAMESS(US) interface to the CHARMM program was already available. To test the methodology, a series of relatively small systems are studied and comparisons are made of full QM calculations with those from various QM-MM partitions. Both density functional and Hartree-Fock calculations for the quantum region are presented aid, where possible, compared with results from previous AM1-MM calculations. For the density functional based QM-MM calculations, the LDA and BLYP functionals were used. The performances of both the density functional and Hartree-Fock based QM-MM calculations compare well with pure quantum calculations. The link atom method was tested by performing a number of QM-MM simulations on the complexes of metal cations with model ligands of biological interest. It was found that it gave good results for the structures, binding energies, and charge distributions.