The mechanism of Rh-catalyzed intermolecular annulation of aryl-substituted diazenecarboxylates and alkenes was investigated using density functional theory (DFT) (PCM-M062X/6-311+G(d,p)//M062X/6-31G(d)). The acetate ligand (OAc)-assisted C-H activation via the formation of a five-membered rhodacycle (I-TS1; ΔG‡ = 19.4 kcal/mol) is more favorable compared to that via a four-membered intermediate (II-TS1; ΔG‡ = 27.8 kcal/mol). Our results also revealed that the seven-membered intermediate (I-3, ΔGrel = -6.8 kcal/mol) formed after the alkene insertion could undergo a coordination switch with the adjacent nitrogen atom (via TScs; ΔG‡ = 16.5 kcal/mol) to produce a thermodynamically stable six-membered intermediate (II-3, ΔGrel = -10.4 kcal/mol), eventually leading to a cyclization process followed by a barrierless ligand-assisted protonation to yield the final product. The β-hydride elimination product was found to be kinetically and thermodynamically undesirable. The rate-determining step is identified as the initial C-H activation, consistent with the previous kinetic studies. Notably, DFT studies offered important insights on the ability of the substrate (diazene carboxylate) to promote the switchable coordination site selectivity during the reaction to achieve a lower energy pathway. © 2016 American Chemical Society.