Density functional theory (DFT) based calculations using large cluster models are used to elucidate the ground state electronic structure of iron bound transferrin. Explicit incorporation of second coordination amino acid residues and crystallographic water molecules anchors the active site. Our calculations clearly suggest that tyrosine amino acid (Tyr188) residue is bound to iron when the structures are optimized within the continuum solvation model. However, in the gas phase optimized structure, we note that Tyr188 is unbound to Fe (by more than 3 Å). The Mössbauer isomer shift (δ) and quadrupolar splitting (ΔE_q) of iron transferrin are in line with the experimental data only when Tyr188 is bound to Fe(III). Further, the computed oxygen hyperfine coupling constant value is very large (−14.5 MHz) when bound to iron which can be verified through ¹⁷O NMR experiments. We propose that Tyr188 is strongly bound to Fe(III) at physiological pH, which needs to be protonated (acidic pH) to weaken this bond, thus the metal release pathway can be possible only in acidic conditions.