Cyclization is the first step in the chromophore maturation process of the green fluorescent protein (GFP). In our previous paper [J. Phys. Chem. B 2012, 116, 1426-1436], the results of molecular dynamics simulation suggested the possibility that the amide nitrogen atom of Gly67 attacks the carbonyl carbon of Ser65 directly to complete the cyclization process (one-step mechanism). In this paper, density functional theory (DFT) and quantum mechanical/molecular mechanical (QM/MM) calculations were undertaken to study this step reaction in detail. Three cluster model systems (model A, model B, and model C) and large protein system were set up to investigate the cyclization process. Our results indicate that the one-step mechanism only exists in the two minimum models. However, in model C and the large protein system, the cyclization mechanism involves two steps: the first step is proton of Gly67 amide nitrogen transferring to carbonyl oxygen of Ser65, generating protonated amide, which is stabilized by a hydrogen bond interaction with a crystallographic water molecule, and the second step is Gly67 amide nitrogen attacking the carbonyl carbon of Ser65. Arg96 plays an important role in promoting the cyclization. The energy of cyclized product relative to reactant is about 10.0 kcal/mol endothermic, which is in line with the experimental results.