Density functional theory and ab initio methods have been used to calculate the structures and energies of minima and transition states for the reactions of methane coordinated to a transition metal. The reactions studied are reversible C-H bond activation of the coordinated methane ligand to form a transition metal methyl hydride complex and dissociation of the coordinated methane ligand. The reaction sequence can be summarized as LxM(CH3)H reversible arrow LxM(CH4) reversible arrow LxM + CH4, where LxM is the osmium-containing fragment (C5H5)Os(R2PCH2PR2)(+) and R is H or CH3. Three-center metal-carbon-hydrogen interactions play an important role in this system. Both basis sets and functionals have been benchmarked in this work, including new correlation consistent basis sets For a third transition series element, osmium. Double zeta quality correlation consistent basis sets yield energies close to those from calculations with quadruple-zeta basis sets, with variations that are smaller than the differences between functionals. The energies of important species on the potential energy surface, calculated by using 10 DFT functionals, are compared both to experimental values and to CCSD(T) single point calculations. Kohn-Sham natural bond orbital descriptions are used to understand the differences between functionals. Older functionals favor electrostatic interactions over weak donor-acceptor interactions and, therefore, are not particularly well suited for describing systems-such as sigma-complexes-in which the latter are dominant. Newer kinetic and dispersion-corrected functionals Such as MPW1K and M05-2X provide significantly better descriptions of the bonding interactions, as judged by their ability to predict energies closer to CCSD(T) values. Kohn-Sham and natural bond orbitals are used to differentiate between bonding descriptions. Our evaluations of these basis sets and DFF functionals lead Lis to recommend the use of dispersion corrected functionals in conjunction with double-zeta or larger basis sets with polarization functions for Calculations involving weak interactions, Such as those found in sigma-complexes with transition metals.