O-Glycoprotein 2-acetamino-2-deoxy-β-D-glucopyranosidase (O-GlcNAcase) hydrolyzes O-linked 2-acetamido-2-deoxy-β-D-glucopyranoside (O-GlcNAc) residues from post-translationally modified serine/threonine residues of nucleocytoplasmic protein. The chemical process involves substrate-assisted catalysis, where two aspartate residues have been identified as the two key catalytic residues of O-GlcNAcase. In this report, the first step of the catalytic mechanism used by O-GlcNAcase involving substrate-assisted catalysis has been studied using a hybrid quantum mechanical/molecular mechanical (QM/MM) Molecular Dynamics (MD) calculations. The free energy profile shows that the formation of the oxazoline intermediate in the O-GlcNAcase catalytic reaction takes place by means of a stepwise mechanism. The first step would be a cyclization of the acetomide group, which seems to be dependent on the proton transfer from a conserved aspartate, Asp298 in Clostridium perfringens O-GlcNAcase. From this new intermediate, a proton is transferred from the azoline ring to another conserved aspartate (Asp297) thus forming the oxazoline ion and departure of the aglycone. In addition, averaged values of protein-substrate interaction energy along the reaction path shows that, in fact, the transition states present the highest binding affinities. A deeper analysis of the binding contribution of the individual residues shows that Asp297, Asp298, and Asp401 are basically responsible of the stabilization of these complexes. These results would explain why O-(2-acetamido-2deoxy-d-glucopyranosylidene)amino-N-phenycarbamate (PUGNAc), 1,2-dideoxy-2'-methyl-α-D-glucopyranoso-[2,1-d]-Δ2'-thiazoline (NAG-thiazoline), and GlcNAcstatin derivatives are potent inhibitors of this enzyme, resembling the two transition states of the O-GlcNAcase catalytic reaction path. These results may be useful to rational design compounds with more interesting inhibitory activity.