The pharmacological function of heroin requires an activation process that transforms heroin into 6-monoacetylmorphine (6-MAM), which is the most active form. The primary enzyme responsible for this activation process in human plasma is butyrylcholinesterase (BChE). The detailed reaction pathway of the activation process via BChE-catalyzed hydrolysis has been explored computationally, for the first time, in this study via molecular dynamics simulation and first-principles quantum mechanical/molecular mechanical free energy calculations. It has been demonstrated that the whole reaction process includes acylation and deacylation stages. The acylation consists of two reaction steps, i.e., the nucleophilic attack on the carbonyl carbon of the 3-acetyl group of heroin by the hydroxyl oxygen of the Ser198 side chain and the dissociation of 6-MAM. The deacylation also consists of two reaction steps, i.e., the nucleophilic attack on the carbonyl carbon of the acyl-enzyme intermediate by a water molecule and the dissociation of the acetic acid from Ser198. The calculated free energy profile reveals that the second transition state (TS2) should be rate-determining. The structural analysis reveals that the oxyanion hole of BChE plays an important role in the stabilization of rate-determining TS2. The free energy barrier (15.9 ± 0.2 or 16.1 ± 0.2 kcal/mol) calculated for the rate-determining step is in good agreement with the experimentally derived activation free energy (~16.2 kcal/mol), suggesting that the mechanistic insights obtained from this computational study are reliable. The obtained structural and mechanistic insights could be valuable for use in the future rational design of a novel therapeutic treatment of heroin abuse.