Nicotinamidase (Nic) is a key zinc-dependent enzyme in NAD metabolism that catalyzes the hydrolysis of nicotinamide to give nicotinic acid. A multi-scale computational approach has been used to investigate the catalytic mechanism, substrate binding and roles of active site residues of Nic from Streptococcus pneumoniae (SpNic). In particular, density functional theory (DFT), molecular dynamics (MD) and ONIOM quantum mechanics/molecular mechanics (QM/MM) methods have been employed. The overall mechanism occurs in two stages: (i) formation of a thioester enzyme-intermediate (IC2) and (ii) hydrolysis of the thioester bond to give the products. The polar protein environment has a significant effect in stabilizing reaction intermediates and in particular transition states. As a result, both stages effectively occur in one step with Stage 1, formation of IC2, being rate limiting barrier with a cost of 53.5 kJ·mol −1 with respect to the reactant complex, RC. The effects of dispersion interactions on the overall mechanism were also considered but were generally calculated to have less significant effects with the overall mechanism being unchanged. In addition, the active site lysyl (Lys103) is concluded to likely play a role in stabilizing the thiolate of Cys136 during the reaction.