The soluble NAD+-reducing Ni-Fe hydrogenase (SH) from Ralstonia eutropha H16 is remarkable because it cleaves hydrogen in the presence of dioxygen at a unique Ni-Fe active site (Burgdorf et al. (2005) J. Am. Chem. Soc. 127, 576). By X-ray absorption (XAS), FTIR, and EPR spectroscopy, we monitored the structure and oxidation state of its metal centers during H2 turnover. In NADH-activated protein, a change occurred from the (CN)O2Ni(II)(mu-S)2Fe(II)(CN)3(CO) site dominant in the wild-type SH to a standard-like S2Ni(II)(mu-S)2Fe(II)(CN)2(CO) site as the prevailing species in a specific mutant protein, HoxH-H16L. The wild-type SH primarily was active in H2 cleavage. The nonstandard reaction mechanism does not involve stable EPR-detectable trivalent Ni oxidation states, namely, the Ni-A,B,C states as observed in standard hydrogenases. In the HoxH-mutant protein H16L, H2 oxidation was impaired, but H2 production occurred via a stable Ni-C state (Ni(III)-H(-)-Fe(II)), suggesting a reaction sequence similar to that of standard hydrogenases. It is proposed that reductive activation by NADH of both wild-type and H16L proteins causes the release of an oxygen species from Ni and is initiated by electron transfer from a [2Fe-2S] cluster in the HoxU subunit that at first becomes reduced by electrons from NADH. Electrons derived from H2 cleavage, on the other hand, are transferred to NAD+ via a different pathway involving a [4Fe-4S] cluster in HoxY, which is reducible only in wild-type SH but not in the H16L variant.