The catalytic mechanism of carboxylesterases (CEs, EC 3.1.1.1) is explored by computational means. CEs hydrolyze ester, amide, and carbamate bonds found in xenobiotics and endobiotics. They can also perform transesterification, a reaction important for instance in cholesterol homeostasis. The catalytic mechanisms with three different substrates (ester, thioester and amide) have been established at the M06-2X/6-311++G**//B3LYP/6-31G* level of theory. It was found that the reactions proceed through a mechanism involving four steps instead of two as it is generally proposed: i) nucleophilic attack of serine to the substrate, forming the first tetrahedral intermediate, ii) formation of the acyl-enzyme complex concomitant with the release of the alcohol product, iii) nucleophilic attack of a water or alcohol molecule forming the second tetrahedral intermediate and iv) the release of the second product of the reaction. The results agree very well with the available experimental data and show that the hydrolytic and the transesterification reactions are competitive processes when the substrate is an ester. In all the other studied substrates (thioester or amide) the hydrolytic and transesterification process are less favorable and some of them might not even take place when in vivo conditions.