Taxadiene synthase (TXS) catalyzes the formation of natural product taxa-4(5),11(12)-diene (henceforth taxadiene). Taxadiene is the precursor in the formation of Taxol, which is an important natural anticancer agent. In the current study, we present a detailed mechanistic view of the biosynthesis of taxadiene by TXS using a hybrid quantum mechanics-molecular mechanics potential in conjunction with free energy simulation methods. The obtained free-energy landscape displays initial endergonic steps followed by a stepwise downhill profile, which is an emerging free-energy fingerprint for type I terpene synthases. We identify an active-site Trp residue (W753) as a key feature of the TXS active-site architecture and propose that this residue stabilized intermediate cations via π-cation interactions. To validate our proposed active TXS model, we examine a previously reported W753H mutation, which leads to the exclusive formation of side product cembrene A. The simulations of the W753H mutant show that, in the mutant structure, the His side chain is in the perfect position to deprotonate the cembrenyl cation en route to cembrene formation and that this abortive deprotonation is an energetically facile process. On the basis of the current model, we propose that an analogous mutation of Y841 to His could possibly lead to verticillane. The current simulations stress the importance of the precise positioning of key active-site residues in stabilizing intermediate carbocations. In view of the great pharmaceutical importance of taxadiene, a detailed understanding of the TXS mechanism can provide important clues toward a synthetic strategy for Taxol manufacturing.