Computational studies at the M06/6-311G(d,p) and M06-2X/6-311+G(d,p) levels were performed to explore the detailed mechanism of isoquinoline ring-opening and denitrogenation in a supercritical water system. Three reaction paths with the same product, 2-(2-oxoethyl) benzaldehyde, were supported by the computational results. The rate-limiting step in the major degradation reaction is an addition reaction at the N position. H2O is added to both the 1C-2N double bond (1C-2N addition reaction) and the 2N-3C double bond (2N-3C addition reaction) of the isoquinoline molecule, where the oxygen of H2O is added to the carbon atom. The energy barrier of the 1C-2N addition reaction is 52.7 kcal/mol, while that of 2N-3C addition (from Path 6) is 60.1 kcal/mol. From catalysis by two water molecules, the barrier of 1C-2N addition (Reaction (1)) is reduced to 27.5 kcal/mol. Catalysis from water molecule clusters is shown to considerably affect the process of isoquinoline ring-opening and denitrogenation, as indicated by comparing the reaction energy barrier heights with and without water catalysts.