Density functional theory calculations were performed to study the mechanism of ethylbenzene oxidation by ethylbenzene dehydrogenase (EBDH). EBDH is a bacterial molybdopterin enzyme capable of stereospecific anaerobic hydroxylation of alkylaromatic compounds to secondary alcohols. It is a key biocatalyst in the metabolism of ethylbenzene-degrading bacteria such as Aromatoleum aromaticum, which converts ethylbenzene to (S)-1-phenylethanol. The recently determined EBDH structure enabled the theoretical description of the ethylbenzene oxidation mechanism. In this work, theoretical calculations and kinetic isotopic experiments were conducted and combined in order to elucidate the reaction mechanism. We considered three aspects: (i) Does the reaction concur with one two-electron or two one-electron transfers? (ii) Is the active site His192 important for the reaction and what is its protonation state? (iii) What catalytic consequences have different possible arrangements of the molybdopterin ligand? The most important outcome of the calculations is that mechanisms involving two one-electron transfers and a radical-type intermediate have lower energy barriers than the corresponding two-electron transfer mechanisms and are, therefore, more plausible. The mechanism involves two transition states: radical-type TS1 associated with the C H bond cleavage, and carbocation-type TS2 associated with the transfer of the second electron and OH rebound. Using models with protonated and nonprotonated His 192, we conclude that this amino acid takes part in the mechanism. However, as both models yielded plausible reaction pathways, its protonation state cannot be easily predicted. Qualitative agreement was reached between the calculated kinetic isotope effects (KIE) obtained for radical TS1 and the KIE measured experimentally at optimum pH, but we observed a very strong pH dependence of KIE throughout the investigated pH range (3.1 for pH 6, 5.9 for pH 7, up to 10.5 at pH 8.). This may be explained by assuming a gradual shift of the rate-determining step from TS1 associated with high KIE to TS2 associated with low KIE with lowered pH and an increasing contribution of proton/deuteron tunneling associated with high pH. Finally, models were calculated with different signs of the conformational twist of the pterin ligands, yielding only slightly different energy profiles of the reaction pathways.