Hydrazine passes through two transition states, TS1 (phi = 0 degrees ) and TS2 (phi = 180 degrees ), in the course of internal rotation around its N-N bond. The origin of the corresponding rotational barriers in hydrazine has been extensively studied by experimental and theoretical methods. Here, we used natural bond orbital (NBO) analysis and energy decomposition of rotational barrier energy (DeltaE(barrier)) to understand the origin of the torsional potential energy profile of this molecule. DeltaE(barrier) was dissected into structural (DeltaE(struc)), steric exchange (DeltaE(steric)), and hyperconjugative (DeltaE(deloc)) energy contributions. In both transition states, the major barrier-forming contribution is DeltaE(deloc). The TS2 barrier is lowered by pyramidalization of nitrogen atoms through lowering DeltaE(struc), not by N-N bond lengthening through lowering DeltaE(steric). Higher pyramidality of nitrogen atoms of TS2 than that of TS1 explains well why the N-N bond of TS2 is longer than that of TS1. Finally, the steric repulsion between nitrogen lone pairs does not determine the rotational barrier; nuclear-nuclear Coulombic repulsion between outer H/H atoms in TS1 plays an important role in increasing DeltaE(struc). Taken together, we explain the reason for the different TS1 and TS2 barriers. We show that NBO analysis is a useful tool for understanding structures and potential energy surfaces of compounds containing the N-N bond.