A recent development to compute free energy changes associated with chemical processes in condensed phase has been reviewed. The methodology is based on the hybrid quantum mechanical/molecular mechanical (QM/MM) approach combined with the novel theory of solutions, where the electronic structure calculation in the QM subsystem is conducted by the Kohn–Sham density functional theory (KS-DFT) utilizing the real-space grids to represent the one-electron orbitals, while the distribution functions for MM molecules needed to compute the free energy change of interest are constructed in terms of the QM/MM interaction energies. The following sections are devoted to the overview of the existing methodologies for the free energy calculation for chemical event and to the detailed description of the real-space-based DFT as well as the theory of solutions. Next we present a theory to combine the quantum mechanics with the statistical mechanics, where an emphasis will be placed on the treatment of the many-body interaction inherent with the quantum mechanical object. Finally, the several applications of the methodology to the solution system are presented to demonstrate the accuracy and efficiency of the method.