We report a combined QM/MM study on the mechanism of the reductive half-reaction of aldehyde oxidoreductase. Five possible pathways are explored concerning the binding mode of acetaldehyde and the catalytic effect of the nearby glutamic acid (Glu869), taking both possible protonation states into account. In the most favorable pathway, Glu869 participates and acts as a Lewis base to deprotonate the labile hydroxide group. This proton transfer is essential for the high activity of the enzyme toward substrate because it increases the nucleophilicity of the migrating O atom and strengthens the electrophilicity of the target C atom in the substrate. The subsequent product-forming reactions occur in two discrete steps, first nucleophilic attack and then hydride transfer, which implies that the oxidation of aldehyde is a two-electron process. A variant of this mechanism, with an additional water molecule bridging the Glu869 side chain and the substrate, has similar barriers. Judging from previous gas phase calculations and our present QM/MM data, the catalytic effect of Glu869 mainly lowers the barrier of the nucleophilic attack so that the hydride transfer becomes the rate-determining step in the reductive half-reaction.