We present theoretical electronic structure calculations on the nature of electronic states and the magnetic coupling in the Mn12O12 free cluster and the Mn12O12(RCOO)16(H2O)4 molecular magnetic crystal. The calculations have been performed with the all-electron full-potential NRLMOL code. We find that the free Mn12O12 cluster relaxes to an antiferromagnetic cluster with no net moment. However, when coordinated by sixteen HCOO ligands and four H2O groups, as it is in the molecular crystal, we find that the ferrimagnetic ordering and geometrical and magnetic structure observed in the experiments is restored. Local Mn moments for the free and ligandated molecular magnets are presented and compared to experiment. We identify the occupied and unoccupied electronic states that are most responsible for the formation of the large anisotropy barrier and use a recently developed full-space and full-potential method for calculating the spin–orbit coupling interaction and anisotropy energies. Our calculated second-order anisotropy energy is in excellent agreement with experiment. © 2000 American Institute of Physics.