Cytidine deaminase catalyzes the hydrolytic deamination of cytidine to uridine and accelerates the rate of the reaction by 10(11)-fold. The enzyme is strongly inhibited by the transition state analogue inhibitor zebularine 3,4-hydrate, and a fraction of transition state stabilization is captured by the interaction of this inhibitor at the active site. QM/MM molecular dynamics and free energy simulations are performed for Escherichia coli cytidine deaminase (CDA) complexed with zebularine 3,4-hydrate to understand the origin of the structural stability of zebularine 3,4-hydrate in the active site and elucidate the mechanism of the CDA-catalyzed reaction. It is shown that the existence of Glu-104 is essential for the structural stability and integrity of zebularine 3,4-hydrate. The simulations also reveal that the covalent bond between C-4 and the 4-OH group in ZEB-H2O undergoes transient bond-breaking and -making in the active site, resembling the process of the nucleophilic attack by the zinc hydroxide group on C-4 during the catalysis. The role of the active-site interactions in stabilizing zebularine 3,4-hydrate and transition state is discussed. The results demonstrate that understanding the stability and integrity of TSA's in the active sites may provide important insights into the origin of transition state stabilization.