The mechanism of direct displacement of alkoxy groups in vinylogous and aromatic esters by Grignard reagents, a reaction that is not observed with expectedly better tosyloxy leaving groups, is elucidated computationally. The mechanism of this reaction has been determined to proceed through the inner-sphere attack of nucleophilic alkyl groups from magnesium to the reacting carbons via a metalaoxetane transition state. The formation of a strong magnesium chelate with the reacting alkoxy and carbonyl groups dictates the observed reactivity and selectivity. The influence of ester, ketone and aldehyde substituents was investigated. In some cases, the calculations predicted the formation of products different than those previously reported; these predictions were then verified experimentally. The importance of studying the actual system, and not simplified models as computational systems, is demonstrated.