Thymidine phosphorylase (TP) is a dual substrate enzyme with two domains. Each domain binds a substrate. In the crystal structure of Escherichia coli TP, the two domains are arranged so that the two substrate binding sites are too far away for the two substrates to directly react. Molecular dynamics simulations reveal a different structure of the enzyme in which the two domains have moved to place the two substrates in close contact. This structure has a root-mean-square deviation from the crystal structure of 4.1 A. Quantum mechanical calculations using this structure find that the reaction can proceed by a direct nucleophilic attack with a low barrier. This mechanism is not feasible in the crystal structure environment and is consistent with the mechanism observed for other N-glycosidic enzymes. Important catalytic roles are found for the three highly conserved residues His 85, Arg 171, and Lys 190.