The two-layered ONIOM(B3LYP:MNDO) method has been used to investigate the hydrolytical mechanism of matrix metalloproteinases (MMPs), a large family of zinc-dependent endopeptidases capable of degrading a wide range of macromolecules of the extracellular matrix. Human stromelysin-1 (MMP-3) was chosen as a physiologically important member of the MMP family. As a structural reference, X-ray data on the stromelysin-1 catalytic domain (SCD) complexed to the transition state analogue diphenyl piperidine sulfonamide inhibitor was used. The backbone spacer of 11 residues (201-211) was included in the final model, spanning the catalytic Glu202 residue and the three structural His201,205,211 zinc ligands. The polypeptide framework incorporated, partly accounting for the protein rigidity, reduces the activation free energy slightly by 1.6 kcal/mol. Essentially a single-step catalytic mechanism was obtained, generally following a classical proposal for MMPs. Glu202 here acts as a base, abstracting a proton from the metal-bound reactant water and delivering this proton to the peptide nitrogen. An auxiliary water molecule is suggested to be of crucial importance acting as an electrophilic agent to the carbonyl oxygen of the substrate. The direct inclusion of the auxiliary water molecule decreases the activation free energy by about 5 kcal/mol via donation of a strong hydrogen bond. The calculated activation barrier of 13.1 kcal/mol agrees well with experimental rates.