The mechanism for oxidation of the hydrogen molecule by NiFe-hydrogenase is reinvestigated. In contrast to most earlier studies, the emphasis is on the entire mechanism, including the oxidation steps. An estimate of the driving force is made, and the main effects of entropy are included. Two different mechanisms are investigated, not only the standard heterolytic cleavage but also homolytic cleavage. Heterolytic cleavage occurs for a NiFe(II,II) oxidation state, while homolytic cleavage occurs for a NiFe(I,II) state. The finding of a previously unreported transition state leads to a lower barrier for the latter mechanism. To reach the homolytic mechanism, one cycle of the heterolytic mechanism is needed. It is argued that the use of the very unusual active site, including CO and CN ligands, is not due to the efficiency of the H-H cleavage but rather to a minimization of the energy loss in the oxidation steps. This means that the H-H cleavage is not preceded by a good binding of molecular H-2. Instead, the transition state is reached directly from the reactant state with a free H-2.