Ferrochelatase catalyzes the insertion of ferrous iron into protoporphyrin IX, the terminal step in heme biosynthesis. Some disputes in its mechanism remain unsolved, especially for human ferrochelatase. In this paper, high-level quantum mechanical/molecular mechanics (QM/MM) and free-energy studies were performed to address these controversial issues including the iron-binding site, the optimal reaction path, the substrate porphyrin distortion, and the presence of the sitting-atop (SAT) complex. Our results reveal that the ferrous iron is probably at the binding site coordinating with Met76, and His263 plays the role of proton acceptor. The rate-determining step is either the first proton removed by His263 or the proton transition within the porphyrin with an energy barrier of 14.99 or 14.87 kcal/mol by the quantum mechanical thermodynamic cycle perturbation (QTCP) calculations, respectively. The fast deprotonation step with the conservative residues rather than porphyrin deformation found in solution provides the driving force for biochelation. The SAT complex is not a necessity for the catalysis though it induces a modest distortion on the porphyrin ring.