Quantum chemical calculations of active-site models of nitrous oxide reductase (N2OR) have been undertaken to elucidate the mechanism of N–O bond cleavage mediated by the supported tetranuclear Cu4S core (CuZ) found in the enzymatic active site. Using either a minimal model previously employed by Gorelsky et al. (J. Am. Chem. Soc. 128:278–290, 2006) or a more extended model including key residue side chains in the active-site second shell, we found two distinct mechanisms. In the first model, N2O binds to the fully reduced CuZ in a bent μ-(1,3)-O,N bridging fashion between the CuI and CuIV centers and subsequently extrudes N2 while generating the corresponding bridged μ-oxo species. In the second model, substrate N2O binds loosely to one of the coppers of CuZ in a terminal fashion, i.e., using only the oxygen atom; loss of N2 generates the same μ-oxo copper core. The free energies of activation predicted for these two alternative pathways are sufficiently close to one another that theory does not provide decisive support for one over the other, posing an interesting problem with respect to experiments that might be designed to distinguish between the two. Effects of nearby residues and active-site water molecules are also explored.