Hydrolysis of methoxide species formed from methane oxidation on Fe-ZSM-5 has been investigated using the ONIOM2 (B3LYP/6311 + G(3df,2p):UFF) method. The steric constraint of the zeolite nanostructured pores modeled by the ONIOM method plays a vital role in regulating the orientation of reactive species around the active iron center and significantly affects the energetic of the reactive species. Two possible pathways for the hydrolysis of the methoxide species to methanol were investigated. The first pathway proceeds in a stepwise manner through adsorption of water on the iron active center and then the hydrolysis of the methoxide by the adsorbed water and the other pathway proceeds in one step with no initial adsorption of a water molecule. The hydrolysis of the methoxide species is found to preferably proceed via the step-wise mechanism with a small activation energy of 13.7 kcal/mol. The reaction is mildly exothermic by 5.2 kcal/mol. The adsorbed methanol can be desorbed requiring energy of 13.2 kcal/mol. Two pathways for the regeneration of the iron active site were evaluated. One is the direct dehydration, which is found to be energetically unfavorable as it requires high activation energy of 38.5 kcal/mol. The other is the water-assisted condensation of hydroxyl groups. The bridging water molecule can reduce the activation energy for proton transfer between the hydroxyl groups by half to 19.4 kcal/mol. Then, the desorption of waters restores the active form of Fe-ZSM-5 with an energy requirement of 22-23 kcal/mol. (c) 2005 Elsevier B.V. All rights reserved.