Rh-based catalysts display unique efficiency and selectivity in catalyzing ethanol synthesis from syngas (2CO + 4H(2) -> C2H5OH + H2O). Understanding the reaction mechanism at the molecular level is the key to rational design of better catalysts for ethanol synthesis, which is one of major challenges for ethanol application in energy. In this work, extensive calculations based on density functional theory (DFT) were carried out to investigate the complex ethanol synthesis on Rh(111). Our results show that ethanol synthesis on Rh(111) starts with formyl formation from CO hydrogenation, followed by subsequent hydrogenation reactions and CO insertion. Three major products are involved in this process: methane; methanol, and ethanol, where the ethanol productivity is low and Rh(111) is highly selective to methane rather than ethanol or methanol. The rate-limiting step of the overall conversion is the hydrogenation of CO to formyl species, while the selectivity to ethanol is controlled by methane formation and C-C bond formation between methyl species and CO. The strong Rh-CO interaction impedes the CO hydrogenation and therefore slows down the overall reaction; however, its high affinity to methyl, oxygen, and acetyl species indeed helps the C-O bond breaking of methoxy species and therefore the direct ethanol synthesis via CO insertion. Our results show that to achieve high productivity and selectivity for ethanol, Rh has to get help from the promoters, which should be able to suppress methane formation and/or boost C-C bond formation. The present study provides the basis to understand and develop novel Rh-based catalysts for ethanol synthesis.