Density functional theory (DFT) calculations and Car-Parrinello molecular dynamics (CPMD) simulations in the explicit acetonitrile-water solvent were carried out to study the ligand dissociation/exchange process and hydrogen production pathway of a common cobaloxime complex, Co(dmgH)2(py)Cl (py = pyridine). Our results show that the axial Cl− is readily replaced by a water molecule which is a key step for the subsequent proton transfer in the hydrogen production cycle. Moreover, the py ligand also dissociates readily from the complex at a later stage. The alternate two electrons and two protons addition pathway was identified to be the favorable one for hydrogen production. The rate determining step of the hydrogen production by Co(dmgH)2(py)Cl is the first protonation of the Co ion, which competes with the proton transfer to the O of the side group of the complex.