EgtB is a nonheme iron enzyme catalyzing the C-S bond formation between γ-glutamyl cysteine (γGC) and N-α-trimethyl histidine (TMH) in the ergothioneine biosynthesis. Density functional calculations were performed to elucidate and delineate the reaction mechanism of this enzyme. Two different mechanisms were considered, depending on whether the sulfoxidation or the S-C bond formation takes place first. The calculations suggest that the S-O bond formation occurs first between the thiolate and the ferric superoxide, followed by homolytic O-O bond cleavage, very similar to the case of cysteine dioxygenase. Subsequently, proton transfer from a second-shell residue Tyr377 to the newly generated iron-oxo moiety takes place, which is followed by proton transfer from the TMH imidazole to Tyr377, facilitated by two crystallographically observed water molecules. Next, the S-C bond is formed between γGC and TMH, followed by proton transfer from the imidazole CH moiety to Tyr377, which was calculated to be the rate-limiting step for the whole reaction, with a barrier of 17.9 kcal/mol in the quintet state. The calculated barrier for the rate-limiting step agrees quite well with experimental kinetic data. Finally, this proton is transferred back to the imidazole nitrogen to form the product. The alternative thiyl radical attack mechanism has a very high barrier, being 25.8 kcal/mol, ruling out this possibility.