In this present work the mechanism by which cAOS catalyzes the formation of allene oxide from its hydroperoxy substrate was computationally investigated by using a DFT-chemical cluster approach. In particular, the effects of dispersion interactions and DFT functional choice (M06, B3LYP, B3LYP*, and BP86), as well as the roles of multistate reactivity and the tyrosyl proximal ligand, were examined. It is observed that the computed relative free energies of stationary points along the overall pathway are sensitive to the choice of DFT functional, while the mechanism obtained is generally not. Large reductions in relative free energies for stationary points along the pathway (compared to the initial reactant complex) of on average 46.3 and 97.3 kJ mol(-1) for the doublet and quartet states, respectively, are observed upon going from the M06 to BP86 functional. From results obtained by using the B3LYP* method, well-tested previously on heme-containing systems, the mechanism of cAOS appears to occur with considerably higher Gibbs free energies than that for the analogous pathway in pAOS, possibly due to the presence of a ligating tyrosyl residue in cAOS. Furthermore, at the IEFPCM-B3LYP*/6-311+G(2df,p)//B3LYP/BS1 level of theory the inclusion of dispersion effects leads to the suggestion that the overall mechanism of cAOS could occur without the need for spin inversion.