Through the joint forces of computation and experiment, the detailed mechanism of the Lu phosphine catalyzed (3 + 2) cycloaddition of allenoates and alkenes has been elucidated. The overall potential energy surface of the Lu (3 + 2) reaction has been computed. More importantly, theory and experiment have confirmed that a trace amount of water plays a critical role in assisting the process of [1,2] proton shift in the Lu reaction.