Based on available three-dimensional structures of enzyme-inhibitor complexes, the mechanism of the reaction catalysed by HIV protease is studied using molecular dynamics simulations with molecular mechanics and combined quantum-mechanics/molecular-mechanics potential energy functions. The results support the general acid/general base catalysis mechanism, with Asp25' protonated in the enzyme-substrate complex. In the enzyme-substrate complex, the lytic water molecule binds at a position different from the positions of the hydroxyl groups in various aspartic protease-inhibitor complexes. The carboxyl groups at the active site also adopt a different orientation. However, when the lytic water molecule approaches the scissile peptide, the reaction centre changes gradually to a conformation close to that derived from X-ray diffraction studies of various enzyme-inhibitor complexes. The proton transfer processes can take place only after the lytic water molecule has approached the scissile peptide bond to a certain degree. Qualitatively, the free-energy barrier associated with the nucleophilic attack step, which takes place at physiological pH, is comparable with the acid or base-catalysed reactions of model systems. The structure of the tetrahedral intermediate resulting from the nucleophilic attack step also indicates a straightforward pathway of the next reaction step, i.e. the breaking of the C-N bond.