Highly correlated ab initio molecular orbital calculations have been used to study the energetics and mechanism governing the reaction between the radical (CH2)-C-1 and H2O in gas phase and in solution. It was found that methylene reacts in a barrierless fashion to produce the ylide-like intermediate methyleneoxonium, H2C-OH2, which in turn undergoes a 1,2-hydrogen shift to produce CH3OH. Results obtained at the QCISD(T)/6-311++G**/ /QCISD/6-311++G** level indicate that in the gas phase, the ylide and the transition state are located 6.4 and 4.9 kcal/mol below reactants, respectively, with an intrinsic barrier for the 1,2-hydrogen shift of 1,4 kcal/mol. In the presence of the solvent, the ylide remains more stable than reactants by 5.5 kcal/mol, while the energy of the transition state is now 1.96 kcal/mol higher than reactants giving a barrier of 7.49 kcal/mol for the 1,2-hydrogen shift.