A density functional study of the hydrolysis reaction of phosphodiesters with a series of attacking nucleophiles in the gas phase and in solution is presented. The nucleophiles HOH, HO-, CH3OH, and CH3O- were studied in reactions with ethylene phosphate, 2'3'-ribose cyclic phosphate and in their neutral (protonated) and monoanionic forms. Stationary-point geometries for the reactions were determined at the density functional B3LYP/6-31++G(d,p) level followed by energy refinement at the B3LYP/6-311++G(3df,2p) level. Solvation effects were estimated by using a dielectric approximation with the polarizable continuum model (PCM) at the gas-phase optimized geometries. This series of reactions characterizes factors that influence the intrinsic reactivity of the model phosphate compounds, including the effect of nucleophile, protonation state, cyclic structure, and solvent. The present study of the in-line mechanism for phosphodiester hydrolysis, a reaction of considerable biological importance, has implications for enzymatic mechanisms. The analysis generally supports the associative mechanism for phosphate ester hydrolysis. The results highlight the importance for the reaction barrier of charge neutralization resulting from the protonation of the nonbridging phosphoryl oxygens and the role of internal hydrogen transfer in the gas-phase mechanism. It also shows that solvent stabilization has a profound influence on the relative barrier heights for the dianionic, monoanionic, and neutral reactions. The calculations provide a comprehensive data set for the in-line hydrolysis mechanisms that can be used for the development of improved semiempirical quantum models for phosphate hydrolysis reactions.