Quantum chemical studies suggest that the Shilov reaction, the activation of alkane CH bonds by Pt salts in aqueous acid solution, goes via transfer of a hydrogen atom from a methane sigma complex to a neighboring Cl ligand in what is best described as a sigma bond metathesis. This avoids the formation of Pt(IV) and is quite similar to the mechanism proposed by Shilov himself. The hydrogen atom being transferred is not very protonic which is best seen by the fact that the transition state is not stabilized by additional water molecules in the bond breaking region, which would be expected to hydrogen bond to any protonic hydrogen. The calculated activation energy, with contributions from temperature and long-range dielectric effects, is in very good agreement with the experimental estimate. An alternative oxidative addition/reductive elimination sequence was found to be competitive for Pt. For Pd, the transition state energy for this pathway is much higher than for a bond metathesis, and oxidative addition can therefore be disregarded. Although a sigma bond metathesis mechanism seems more likely for Shilov chemistry with Pt, an oxidative addition/reductive elimination sequence cannot be safely excluded in the Pt case. The second coordination sphere of the solvent is found to play an important role in the Shilov reaction, both as ultimate proton acceptor from the methane and also in the energetics of methane binding; the latter directly contributes to the overall activation energy. The presence of only a few waters in the computational model allows these effects to be studied. The origin of the unusual preferential attack on primary versus secondary CH bonds in the system has been traced to the higher polarity of the n-alkyl versus the isoalkyl bond formed in the sigma bond metathesis step.