We have applied a nonlocal density functional method to the study of ethylene polymerization with a Ni(II) catalytic center coordinated to diimine (HN=CH-CH=NH). We have investigated chain initialization, chain propagation, as well as chain isomerization and chain termination. Chain initialization proceeds in a stepwise fashion, with an overall activation barrier of 11.1 kcal/mol. Chain propagation can proceed via two different pathways, which have similar activation energies (16.8 and 17.5 kcal/mol, respectively). In contrast to behavior observed for metallocene catalysts, none of the insertion transition states show agostic stabilization. The activation energy for chain isomerization is 12.8 kcal/mol, which proceeds via a concerted mechanism, rotating the chain and simultaneously abstracting the beta-agostic hydrogen. Chain termination occurs via a stable hydride intermediate, which is formed with a barrier of 9.7 kcal/mol and decays into the termination product with a small activation energy of 1.7 kcal/mol. Production of experimentally observed high molecular weight polymers can only be explained by suppression of the chain termination transition state due to sterically demanding substituents on the diimine ligand.