The mechanism, solvent effects, and origins of selectivities in Ru(II)-catalyzed intramolecular (5+2) cycloaddition and ene reaction of vinylcyclopropanes (VCPs) and alkynes have been studied using density functional theory. B3LYP/6-31G(d)/LANL2DZ optimized structures were further evaluated with the M06 functional, 6-311+G(2d,p) and LANL2DZ basis sets, and the SMD solvent model. The favored mechanism involves an initial ene-yne oxidative cyclization to form a ruthenacyclopentene intermediate. This mechanism is different from that found earlier with rhodium catalysts. The subsequent beta-hydride elimination and cyclopropane cleavage are competitive, determining the experimental selectivity. In trans-VCP, the cyclopropane cleavage is intrinsically favored and leads to the (5+2) cycloaddition product. Although the same intrinsic preferences occur with the cis-VCP, an unfavorable rotation is required in order to generate the cis-double bond in seven-membered ring product, which reverses the selectivity. Acetone solvent is found to facilitate the acetonitrile dissociation from the precatalyst, destabilizing the resting state of the catalyst and leading to a lower overall reaction barrier. In addition, the origins of diastereoselectivities when the allylic hydroxyl group is trans to the bridgehead hydrogen are found to be the electrostatic interactions. In the pathway that generates the favored diastereomer, the oxygen lone pairs from the substituent are closer to the cationic catalyst center and provide stabilizing electrostatic interactions. Similar pathways also determine the regioselectivities, that is, whether the more or less substituted C-C bond of cyclopropane is cleaved. In the trans-1,2-disubstitued cyclopropane substrate, the substituent from the cyclopropane is away from the reaction center in both pathways, and low regioselectivity is found. In contrast, the cleavage of the more substituted C-C bond of the cis-1,2-disubstituted cyclopropane has steric repulsions from the substituent, and thus higher regioselectivity is found.