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Salicylic acid decarboxylase (SDC) from the amidohydrolase superfamily (AHS) catalyzes the reversible decarboxylation of salicylic acid to form phenol. In this study, the substrate binding mode and reaction mechanism of SDC were investigated using computational and crystallographic methods. Quantum chemical calculations show that the enzyme follows the general mechanism of AHS decarboxylases. Namely, the reaction begins with proton transfer from a metal-coordinated aspartic acid residue (Asp298 in SDC) to the C1 of salicylic acid, which is followed by the C–C bond cleavage, to generate the phenol product and release CO₂. Interestingly, the calculations show that SDC is a Mg-dependent enzyme rather than the previously proposed Zn-dependent, and the substrate is shown to be bidentately coordinated to the metal center in the catalysis, which is also different from the previous proposal. These predictions are corroborated by the crystal structure of SDC solved in complex with the substrate analogue 2-nitrophenol. The mechanistic insights into SDC in the present study provide important information for the rational design of the enzyme.