Cytochrome P450 17A1 (CYP17A1) catalyzes C17 hydroxylation of pregnenolone and progesterone and the subsequent C17-C20 bond cleavage (lyase reaction) to form androgen precursors. Compound I (Cpd I) and peroxo anion (POA) are the heme-reactive species underlying the two reactions. We have characterized the reaction path for both the hydroxylase and lyase reactions using density functional theory (DFT) calculations and the enzyme-substrate interactions by molecular dynamics (MD) simulations. Activation barriers for positions subject to hydroxylase reaction have values close to each other and span from 54 to 60 kJ·mol-1 with a small preference for 17α hydroxylation, in agreement with experimental observations. For the lyase reaction, two different types of mechanisms, concerted and stepwise, with identical activation energies (87 kJ·mol-1) were identified. Embedding the DFT-optimized transition states (TSs) for the two reactions into the active site of CYP17A1 showed that the TS for the C17 hydroxylation needs to be distorted by 13 kJ·mol-1, whereas the TS for the 17,20 lyase reaction easily can be accommodated in the protein. Finally, differences in the hydrogen-bond pattern of the substrates were detected both in the CYP17A1-Cpd I and CYP17A1-POA complexes, with the former found to be more pivotal for the hydroxylation site than the latter, suggesting a possible explanation for the slower conversion of CYP17A1 for 17α-hydroxyprogesterone over 17α-hydroxypregnenolone. The results support the concept that the selectivity of the steroidogenic CYPs is ruled by direct interactions with the enzyme, in contrast to the selectivity of drug-metabolizing CYPs, where the reactivity of the substrates dominates.