Ab initio molecular orbital calculations are used to examine the mechanism of action of B12-dependent ethanolamine ammonia-lyase involving the conversion of 2-aminoethanol to acetaldehyde plus ammonia. We attempt to elucidate the mechanism by which the enzyme facilitates this reaction through interactions between active-site residues and the substrate. Our calculations suggest a preferred pathway involving a 1,2-shift in the associated radical and also suggest that interactions between the enzyme and the migrating group of the substrate that afford an almost fully protonated migrating group will lead to the most efficient catalysis. However, this criterion on its own is insufficient to fully understand the rearrangement. Additional synergistic interactions between the spectator hydroxyl group in the substrate and active-site residues on the enzyme are required to lower the barrier height to a value consistent with experimental observations.