Lytic transglycosylases (LTs) catalyze the non-hydrolytic cleavage of the bacterial cell wall by an intramolecular transacetalization reaction. This reaction is critically and broadly important in modifications of the bacterial cell wall in the course of its biosynthesis, recycling, manifestation of virulence, insertion of structural entities such as the flagellum and the pili, among others. The first QM/MM analysis of the mechanism of reaction of an LT, that for the Escherichia coli MltE, is undertaken. The study reveals a conformational itinerary consistent with an oxocarbenium-like transition state, characterized by a pivotal role for the active-site glutamic acid in proton transfer. Notably, an oxazolinium intermediate, as a potential intermediate, is absent. Rather, substrate-assisted catalysis is observed through a favorable dipole provided by the N-acetyl carbonyl group of MurNAc saccharide. This interaction stabilizes the incipient positive charge development in the transition state. This mechanism coincides with near-synchronous acetal cleavage and acetal formation.