The mechanism of epsilon-caprolactone (CL) insertion into a Y-OCH3 bond was investigated using density functional theory (DFT) calculations. The optimized geometries and corresponding Gibbs-free energies of the intermediates were obtained, which confirmed a four-step coordination-insertion mechanism. The coordination of CL onto yttrium center led to a nucleophilic addition of the carbonyl group of CL, followed by an intramolecular alkoxide ligand exchange. A monomer insertion was completed by the CL ring opening via acyl-oxygen bond cleavage. The formation of the five-coordinated yttrium intermediate, 3, was found to be the rate-determining step. This Study could be applicable to ring-opening polymerisation (ROP) of CL initiated by lanthanide metal complexes. (C) 2008 Elsevier B.V. All rights reserved.