The catalytic mechanism of N2 fixation by nitrogenase has been discussed over decades, but still remains unresolved in how the strong N≡N bond is activated and why the reaction requires the reductive elimination of H2. In this work, we use two different levels of Density Functional Theory (DFT) while also considering the influence of statistical fluctuations from finite temperature ab initio molecular dynamics to elucidate the functional mechanism of the complete nitrogenase catalytic cycle. Over the accumulation of four reducing equivalents we show that protons and electrons transfer to the FeMo-cofactor to weaken and break the Fe-S bond that then exposes the Fe coordination sites to physisorb the N2 molecule. Remarkably, we find that subsequent H2 formation is responsible for chemical activation to an N=N double bond (up to 0.09 Å elongation) with a low barrier (< 5 kcal/mol) to H2 release. This greatly eases the hydrogenation step to NH3 with furtherH2S consumption, completing the catalytic cycle of N2 + 8H+ + 8e- → 2NH3 + H2. This work helps explain why H2 formation is an obligatory and essential step in N2 adsorption and activation, insight that will inform the design of molecular catalysts and other N2 reduction reactions.