A fully optimized model for the resting state of the active site of the third type of phylogenetically unrelated (monoiron) hydrogenase, iron-sulfur cluster-free hydrogenase (Hmd), was constructed based on density functional calculations. This resting state structure shows good agreement with the experimental IR spectra. The calculations predict that the barrier for H-2 cleavage in the presence of MPT+ is similar to 18 kcal/mol lower than that in the absence of MPT+, a result that explains why the isotopic H-2/D2O exchange catalyzed by Hmd is strictly dependent on the presence of MPT+. This difference is a result of the MPT+ triggering the pyridone to provide electron density to allow the Fe to take a proton while transferring a hydride to the MPT+. These active site models and catalytic mechanism are useful in understanding this hydrogen activation for the design of novel hydrogenation catalysts and for low cost, high efficiency hydrogen generation.