To examine how azole inhibitors interact with the heme active site of the cytochrome P450 enzymes, we have performed a series of density functional theory studies on azole binding. These are the first density functional studies on azole interactions with a heme center and give fundamental insight into how azoles inhibit the catalytic function of P450 enzymes. Since azoles come in many varieties, we tested three typical azole motifs representing a broad range of azole and azole-type inhibitors: methylimidazolate, methyltriazolate, and pyridine. These structural motifs represent typical azoles, such as econazole, fluconazole, and metyrapone. The calculations show that azole binding is a stepwise mechanism whereby first the water molecule from the resting state of P450 is released from the sixth binding site of the heme to create a pentacoordinated active site followed by coordination of the azole nitrogen to the heme iron. This process leads to the breaking of a hydrogen bond between the resting state water molecule and the approaching inhibitor molecule. Although, formally, the water molecule is released in the first step of the reaction mechanism and a pentacoordinated heme is created, this does not lead to an observed spin state crossing. Thus, we show that release of a water molecule from the resting state of P450 enzymes to create a pentacoordinated heme will lead to a doublet to quartet spin state crossing at an Fe-OH2 distance of approximately 3.0 Å, while the azole substitution process takes place at shorter distances. Azoles bind heme with significantly stronger binding energies than a water molecule, so that these inhibitors block the catalytic cycle of the enzyme and prevent oxygen binding and the catalysis of substrate oxidation. Perturbations within the active site (e.g., a polarized environment) have little effect on the relative energies of azole binding. Studies with an extra hydrogen-bonded ethanol molecule in the model, mimicking the active site of the CYP121 P450, show that the resting state and azole binding structures are close in energy, which may lead to chemical equilibrium between the two structures, as indeed observed with recent protein structural studies that have demonstrated two distinct azole binding mechanisms to P450 heme.