The The mechanism of reaction between 3-hydroxy-3-methyl-2-butanone and malononitrile for the synthesis of 2-dicyanomethylene-4, 5, 5-trimethyl-2,5-dihydrofuran-3-carbonitrile catalyzed by lithium ethoxide was investigated by density functional theory (DFT). The geometries and the frequencies of reactants, intermediates, transition states and products were calculated at the B3LYP/6-31G(d) level. The vibration analysis and the IRC analysis verified the authenticity of transition states. The reaction processes were confirmed by the changes of charge density at the bond-forming critical point. The results indicated that lithium ethoxide is an effective catalyst in the synthesis of 2-dicyanomethylene-4, 5, 5-trimethyl-2, 5-dihydrofuran-3-carbonitrile from malononi-trile and 3-hydroxy-3-methyl-2-butanone. The activation energy of the reaction with lithium ethoxide was 115.86 kJ·mol−1 less than the uncatalyzed reaction. The mechanism of the lithium ethoxide catalyzed reaction differed from the mechanism of the uncatalyzed reaction.