The redox cycle between alloxan, a mild oxidizing agent, and its reduction partner, dialuric acid, is investigated using density functional theory. It is found that the initial step is the one-electron reduction of alloxan followed by protonation, yielding a stable neutral radical, AH·. The radical can then accept another electron to form the dialuric acid anion. The formation of this anion is thermodynamically favored in both the gas phase and in solution. The radical may also undergo dimerization to alloxantin, followed by the transfer of a proton from one moiety to another, yielding alloxan and dialuric acid. This reduction is thermodynamically feasible in the gas phase, but not in aqueous solution. In the case of reduction of alloxan by glutathione at the physiological pH, computed redox potentials indicate that a two-electron reduction is the favored course of reaction, yielding directly the dialuric acid anion, which then undergoes aerial oxidation to yield the superoxide radical. The redox cycling between alloxan and dialuric acid is responsible for the diabetogenic activity of alloxan, producing cytotoxic radicals on reoxidation of dialuric acid. © 2013 Wiley Periodicals, Inc.