QM/MM methods are widely used for studies of reaction mechanisms in water and protein environments. Recently, we have developed the VB/MM method in which the QM part is implemented by the ab initio valence bond (VB) method. Here, we report on further improvement of the VB/MM method which makes it possible to use the method for reactivity studies in systems where the QM and MM parts are connected by covalent bonds followed by first ab initio VB study of reactivity in proteins. We implemented a simple link atom, scheme to treat the boundary interactions. We tested the performance of the link atom, treatment in combination with the VB/MM method on an SN2 reaction and found it to be sufficiently accurate. We then used the VB/MM method to study the S N2 reaction in haloalkane dehalogenase (DhlA). We show that the predicted reaction barrier heights are in good agreement with estimated experimental values, thereby validating the method. Finally, we analyze the reaction energetics in terms of contributions of the VB configurations and conclude that such analysis is instrumental in pinpointing the essential features of the catalytic mechanism.