We investigate the mechanism of methanol oxidation to formaldehyde by ironoxido ([(FeO)-O-IV](2+)), the alleged active intermediate in the Fenton reaction. The most likely reaction mechanisms are explored with density functional theory (DFT) calculations on microsolvated clusters in the gas phase and, for a selected set of mechanisms, with constrained Car-Parrinello molecular dynamics (CPMD) simulations in water solution. Helmholtz free energy differences are calculated using thermodynamic integration in a simulation box with 31 water molecules at 300 K. The mechanism of the reaction is investigated with an emphasis on whether FeO2+ attacks methanol at a C-H bond or at the O-H bond. We conclude that the most likely mechanism is attack by the oxido oxygen at the C-H bond ("direct CH mechanism"). We calculate an upper bound for the reaction Helmholtz free energy barrier in solution of 50 kJ/mol for the C-H hydrogen transfer, after which transfer of the O-H hydrogen proceeds spontaneously. An alternative mechanism, starting with coordination of methanol directly to Fe ("coordination OH mechanism"), cannot be ruled out, as it involves a reaction Helmholtz free energy barrier in solution of 44 +/- 10 kJ/mol. However, this coordination mechanism has the disadvantage of requiring a prior ligand substitution reaction, to replace a water ligand by methanol. Because of the strong acidity of [FeO(H2O)5](2+), we also investigate the effect of deprotonation of a first-shell water molecule. However, this is found to increase the barriers for all mechanisms.