iso-Orotate decarboxylase (IDCase), which is involved in the thymidine salvage pathway, has attracted considerable interest owing to its chemical similarity to a hypothetical DNA decarboxylase in mammals. Although valuable insights into the active DNA demethylation of 5-methyl-cytosine can be obtained from the decarboxylation mechanism of 5-carboxyl-uracil (5caU) catalyzed by IDCase, this mechanism remains under debate. In this study, the catalytic mechanism of 5caU decarboxylation by IDCase was studied using hybrid quantum mechanics/molecular mechanics (QM/MM) methodologies and density functional theory (DFT) calculations with a truncated model. The calculations supported a mechanism involving three sequential stages: activation of the 5caU substrate via proton transfer from an arginine (R262') to the carboxyl group of 5caU, formation of a tetrahedral intermediate, and decarboxylation of the tetrahedral intermediate to generate uracil as the product. The reaction pathways and structures obtained using the QM/MM and DFT methods coincided with each other. These simulations provided detailed insights into the unique mechanism of IDCase, clarifying various unresolved issues, such as the critical role of R262'. In addition, aspartate D323 was found to act as a general base in the tetrahedral intermediate formation step and a general acid in the later C-C bond cleavage step.