In this B3LYP study, the catalytic mechanisms for the hydrolysis of the three different peptide bonds (Lys28-Gly29, Phe19-Phe20, and His14-Gln15) of Alzheimer amyloid beta (Abeta) peptide by insulin-degrading enzyme (IDE) have been elucidated. For all these peptides, the nature of the substrate was found to influence the structure of the active enzyme-substrate complex. The catalytic mechanism is proposed to proceed through the following three steps: (1) activation of the metal-bound water molecule, (2) formation of the gem-diol intermediate, and (3) cleavage of the peptide bond. With the computed barrier of 14.3, 18.8, and 22.3 kcal/mol for the Lys28-Gly29, Phe19-Phe20, and His14-Gln15 substrates, respectively, the process of water activation was found to be the rate-determining step for all three substrates. The computed energetics show that IDE is the most efficient in hydrolyzing the Lys28-Gly29 (basic polar-neutral nonpolar) peptide bond followed by the Phe19-Phe20 (neutral nonpolar-neutral nonpolar) and His14-Gln15 (basic polar-neutral polar) bonds of the Abeta substrate.