The catalytic mechanism of nitrate reduction by periplasmic nitrate reductases has been investigated using theoretical and computational means. We have found that the nitrate molecule binds to the active site with the Mo ion in the +6 oxidation state. Electron transfer to the active site occurs only in the proton-electron transfer stage, where the Mo-V species plays an important role in catalysis. The presence of the sulfur atom in the molybdenum coordination sphere creates a pseudo-dithiolene ligand that protects it from any direct attack from the solvent. Upon the nitrate binding there is a conformational rearrangement of this ring that allows the direct contact of the nitrate with Mo-VI ion. This rearrangement is stabilized by the conserved methionines Met141 and Met308. The reduction of nitrate into nitrite occurs in the second step of the mechanism where the two dimethyl-dithiolene ligands have a key role in spreading the excess of negative charge near the Mo atom to make it available for the chemical reaction. The reaction involves the oxidation of the sulfur atoms and not of the molybdenum as previously suggested. The mechanism involves a molybdenum and sulfur-based redox chemistry instead of the currently accepted redox chemistry based only on the Mo ion. The second part of the mechanism involves two protonation steps that are promoted by the presence of Mo-V species. Mo-VI intermediates might also be present in this stage depending on the availability of protons and electrons. Once the water molecule is generated only the Mo-VI species allow water molecule dissociation, and, the concomitant enzymatic turnover.