NTO (5-nitro-1,2,4-triazol-3-one), an energetic material used in military applications, may be released to the environment during manufacturing, transportation, storage, training, and disposal. A detailed investigation of the possible mechanism for all steps of reduction of NTO by oxygen-insensitive nitroreductase, as one of the pathways for NTO environmental degradation, was performed by computational study at the PCM(Pauling)/M06-2X/6-311++G(d,p) level. Obtained results reveal an overall sequence for NTO transformation into ATO (5-amino-1,2,4-triazol-3-one) with the flavin mononucleotide (FMN) cofactor of nitroreductase. Reduction of the nitro group to the nitroso group and the nitroso group to the hydroxylamino group follow a similar mechanism that consists of the sequential electron and proton transfer from the flavin cofactor. The hydride transfer mechanism may contribute to reduction of the nitroso group by the anionic form of the reduced flavin cofactor. Reduction of 5-(hydroxylamino)-1,2,4-triazol-3-one by the neutral form of the reduced flavin is impossible, whereas reduction of the hydroxylamino group to the amino group occurs with the anionic form of the reduced cofactor by a mechanism involving an initial proton transfer from the hydroxonium ion followed by two electrons and one proton transfers from the flavin cofactor. Small activation energies and high exothermicity support the significant contribution of oxygen-insensitive nitroreductase and other enzymes, containing FMN as a cofactor, to NTO degradation in the environment.