A family of F420-dependent reductases (FDRs) from Mycobacteria has been recently been characterized and found to play a variety of roles, from xenobiotic metabolism, to activation of prodrugs such as the candidate anti-tuberculosis drug, PA-824. However, our understanding of the catalytic mechanism used by these enzymes is relatively limited. To address this, we have studied the process of PA-824 activation by DDN from Mycobacterium tuberculosis using a combination of high-level quantum chemical calculation, spectroscopy and kinetic analysis. Our results show that the catalytic power of these enzymes derives from three main effects: maintaining the cofactor in a deprotonated state, charge stabilization of the transition state and proton transfer. The increased understanding of these as a result of this work will benefit future design of prodrugs and exploitations of these enzymes in biotechnology.