The proteasome is a key protease in the eukaryotic cells which is responsible for various important cellular processes such as the control of the cell cycle, immune responses, protein homeostasis, inflammation, apoptosis, and the response to proteotoxic stress. Acting as a major molecular machine for protein degradation, proteasome first identifies damaged or obsolete regulatory proteins by attaching ubiquitin chains and subsequently utilizes conserved pore loops of the heterohexameric ring of AAA+ (ATPases associated with diverse cellular activities) to pull and mechanically unfold and translocate the misfolded protein to the active site for proteolysis. A detailed knowledge of the reaction mechanism for this proteasomal proteolysis is of central importance, both for fundamental understanding and for drug discovery. The present study investigates the mechanism of the proteolysis by the proteasome with full consideration of the protein's flexibility and its impact on the reaction free energy. Major attention is paid to the role of the protein electrostatics in determining the activation barriers. The reaction mechanism is studied by considering a small artificial fluorogenic peptide substrate (Suc-LLVY-AMC) and evaluating the activation barriers and reaction free energies for the acylation and deacylation steps, by using the empirical valence bond method. Our results shed light on the proteolysis mechanism and thus should be important for further studies of the proteasome action.